Suppose you need to fill up with some gasoline. For this, you look for gases with a good reputation. Surprisingly, Sinclair appears on the list but at a competitive price. You think, “Why is Sinclair gas so cheap?” Does this low price refer to its poor quality? Well, I will explain everything regarding whether you should buy or refrain from selecting it.
Starting in 1916 by Harry F. Sinclair, Sinclair Oil Corporation (or simply, Sinclair) is serving gas nationwide in the USA. Besides, its unique business model (franchising and vertical integration) with its “years-old” reputation are the crucial factors in setting up the fuel price.
In this blog, you will learn about versatile factors that help this brand to allow consumers to save more money. For sure, you will figure out if the low price impacts on its quality, availability, and position in the industry.
Sinclair’s Business Model – Primary Reason for Getting Affordable Gas
Indeed, Sinclair is a long-standing energy company with over 1,600 independent Sinclair-branded stations. Its oil is available across more than 30 states (1). So, it means people are actually buying it! But that’s not what I am talking about.
The business model is essential in setting a comparatively lower Sinclair gasoline rate. Hence, two key aspects of this model are franchising and vertical integration. You may ask me what these things are. Also, you may find them intriguing – at least, I guess.
Franchising
It is the core component of Sinclair’s business model. Let me give you some definitions:
According to Market Business News, it is like a unique partnership where one company (franchisor) lets another person or business (franchise) sell its stuff. Also, they can use its name and way of doing business in a particular place for a specific time.
Steven C. Michael in his research paper says almost the same thing. He refers to franchising as an event where a company owns a trademark, a way of making products, or both. However, another business can use these assets in exchange for payments.
In the case of Sinclair, it franchises its brand to many independent operators to expand its network of stations. It helps this company to run its business without bearing the total cost of owning and operating these stations. So, it can benefit more from the sales of gasoline. On the other hand, the franchisees handle the day-to-day operations of the stations.
You may read this article to see how franchising helps to benefit more without increasing the price of goods.
Vertical Integration
It is another significant aspect of Sinclair’s business model. I am adding some definitions again – don’t get bored, please!
Wikipedia defines vertical integration as, “an arrangement in which the supply chain of a company is integrated and owned by that company.”
According to Investopedia, it occurs when a company (like Sinclair) takes direct control of different parts of its production process. It doesn’t depend on external contractors or suppliers. It helps the company streamline its operations.
Guess what? Sinclair controls every stage of its operations – from oil exploration and extraction to refining and retailing. This integration allows the brand to cut costs and improve efficiency. Likewise, there is no need to rely on external suppliers or distributors.
When a company controls its supply chain, it can ensure a steady supply of products. For instance, Sinclair supplies gas steadily to its stations. Also, it responds fast to changes in market conditions. When most tasks are done without depending on others, even you can reduce your goods’ prices like Sinclair. It is what Sinclair does in its business.
The Dinosaur Logo: An Iconic Brand Image & Reason for Saving Wallet on Gas
Besides the business model, the dinosaur icon “Dino” has also played a significant role in Sinclair’s success (2). Introduced in 1930, Dino quickly became a famous symbol. It has been helping the company to establish brand identity and attract customers (3).
The green dinosaur (a Brontosaurus) has been a fixture of the Sinclair brand since the 1930s as Wikipedia says. Consequently, this logo connects between the formation of petroleum deposits and the time of dinosaurs.
It was a common misconception at the time of the logo’s creation. Despite the scientific inaccuracy, the dinosaur logo has become an iconic emblem of the Sinclair brand. Moreover, the logo is not just a marketing stunt. It embodies Sinclair’s long history and evolution in the petroleum industry.
The dinosaur logo symbolizes quality, reliability, and affordability for many customers. Also, it resembles the values that Sinclair stands for. All these things regarding the logo (the brand itself) have made the company offer its products at affordable prices.
Notable Factors Affecting Sinclair’s Affordable Pricing
Well, you can attribute the affordability of Sinclair’s gasoline to several vital factors. I will explain why other gas prices are higher than Sinclair in this part.
Economies of Scale
Investopedia refers, “Economies of scale are cost advantages reaped by companies when production becomes efficient.”. When any company increases its production level, it can reduce the production cost. As I said, Sinclair is a large-scale producer of gasoline. So, it can spread out its fixed costs over multiple units. It will help you to get cheaper gas from Sinclair.
Efficient Operations and Logistics
These factors also play a crucial role in Sinclair’s pricing strategy. The company has optimized its supply chain to minimize costs and improve efficiency. Thus, it includes efficiently transporting crude oil to its refineries and gasoline distribution to its stations.
The Location
The strategic location of Sinclair’s refineries is also the reason for its affordable pricing. It can reduce transportation costs by situating its refineries close to crude oil sources. Therefore, these savings are passed on to consumers through lower gasoline prices.
Cost of Crude Oil
U.S. Energy Information Administration (EIA) says, the crude oil cost is the most significant factor affecting gasoline prices. Well, global supply and dynamics determine oil prices. Economic growth, geopolitical events, and severe weather can disrupt the flow of crude oil. As a result, the price of crude oil rises.
Refinery Operational Costs
Refining costs can vary seasonally and by region. The type of crude oil and processing technology available at the refinery affect these costs. Sinclair’s ability to manage these costs effectively contributes to its affordable pricing.
Weather
You may think about the weather as it may not have a connection with gas prices. However, that’s not accurate thinking. Instead, it leads to temporary supply disruptions that can increase costs. For instance, in the Gulf of Mexico Hurricanes can affect the region’s oil production and refinery operations.
Loyalty Programs – Another Reason for Low-Cost Sinclair Gasoline
Sinclair Oil Corporation offers a loyalty program called DinoRewards. It allows customers to earn rewards with online purchases that can be converted into discounted gas (4). Participants in this program can also receive free phone calls.
The DINOPAY® Mobile App is another part of the loyalty program. It offers $0.10 per gallon or more savings at participating locations (5). Also, this app provides contactless pay at the pump or inside. So, users can track all their Sinclair purchases.
Additionally, the Mobile Advantage™ payment option through the DINOPAY® wallet offers discounts on Sinclair gas or snacks at participating locations without needing a credit card. It is also known as the mobile advantage account (6).
The Sinclair Fleet Track Card offers several benefits for commercial fleets. It provides savings of up to 6¢ per gallon at over 1,500 Sinclair locations. Also, it is accepted at 95% of U.S. gas stations and over 45,000 service locations (7).
The Sinclair Green Card offers several benefits and discounts to its users. Sinclair funds a 5¢ off per gallon of instant rollback savings for participating stations (8). For sure, you can save 20¢/gallon instantly on every fill-up by paying directly from your checking account through the secure DINOPAY® app (9).
Does Affordable Rates Reduce the Quality of Sinclair Gasoline?
No, obviously not! After all, Sinclair is committed to providing high-quality gasoline to its customers. Let me explain it more.
The DinoCare™ of Sinclair’s gas is a proprietary blend of additives. It improves fuel economy, reduces engine deposits, and lowers maintenance costs. These benefits offer significant savings for Sinclair’s customers over the long term (10).
Besides, the company uses other additives to enhance the quality of its gasoline. These additives can clean the engine, reduce emissions, and improve performance. Overall, this focus on quality is one of the reasons why Sinclair still offers gas with competitive pricing.
Final Words – Why is Sinclair Gas So Cheap?
I hope everything is clear, like water, right? From the beginning, I have explained how Sinclair runs its business. Then, I have explained the role of the dinosaur logo and why it stands as a symbol of quality oil at cheaper prices.
In the latter part, you have learned about different factors that affect the pricing of Sinclair gases. And, of course, those loyalty programs are suitable for keeping your budget low for buying gasoline.
No more today – thanks for reading this blog!
