Gas price conspiracy hard to prove
June 17, 2001
Proving there’s a gas price conspiracy is like proving there’s an Area 51. People know something is there, but they can’t get close enough to the fence to prove it.
Gas prices in Moffat County have traditionally been higher than most of the state, prompting consumers to ask: “Why?”
Easy question, but one not many are willing to answer.
Those who sell gasoline are not required to provide a lot of information relevant to the question. The profit made on a gallon of gasoline is a well-guarded secret that not even political officials are privy to because congress protects a distributor’s privilege of not disclosing its profit margins.
And, according to John Bennitt, public relations director for Conoco, there is no regulation on how much profit a business can make on the sale of gasoline.
Former Colorado Sen. Dave Wattenburg, hounded by complaints from his Northwest Colorado constituents, launched an investigation several years ago, but found no trace of impropriety.
The answer, vague though it may be, remains transportation and market.
Industry officials say that gasoline is trucked through Craig and down to Grand Junction. There, gas station tanks are filled and the trucks return to Craig to leave the remainder of their load here. Northwest Colorado consumers pay the cost of transporting the gasoline from its origin to Grand Junction and back to Craig. The demand from larger markets obviously takes precedence over smaller ones.
Secondly, as one gas station owner said, it costs a rural gas station owner the same amount to operate as it does a metro station, but a metro gas station has a larger customer pool to fish from. A station in a larger market can sell hundreds of gallons of gas enough to pay its overhead in a day, whereas a station in a small town must make the same payments on fewer sales. Hence, the higher price.
Station owners aren’t the only ones who get a say on what the price of gas will be. Both the federal and state governments take their share.
State and federal taxes account for nearly 40 cents of each gallon of gasoline purchased. The current federal gas tax is 18.3 cents per gallon. Colorado remains in the middle of the pack as far as state gas tax with its 20 cents a gallon charge. In Wyoming, the tax is 14 cents a gallon and in Utah it’s 24 cents.
Gas prices fluctuate according to the oil market, demand and season. A hinted rumor that production might decrease leads to a nationwide increase in gas prices. Someone in OPEC blinks, and prices jump. Word-of-mouth, speculation, weather and mood have as much to do with gas prices as hard numbers and consistent production do.
Oil prices fell last week amid data showing a build-up in U.S. gasoline supplies, but a heavy drain on crude oil stocks and lingering anxiety over halted Iraqi exports prevented a sharper drop, despite the fact that OPEC members promised to make up the shortage.
Perhaps the biggest factor in the price of gasoline is American dependence on foreign countries for a resource it could provide on its own. And the only thing that will change that is public outcry.
President Bush is attempting to free up America’s oil reserves which were locked up during the last administration, but is facing heavy opposition from environmental groups. Bush has blamed the spike in gasoline prices on the Clinton administration’s energy policy, part of which prohibited drilling on millions of acres of wilderness in the United States.
As a presidential candidate, Bush said the high cost of crude oil is to blame for high gasoline prices, and promised that as president, he would convince OPEC allies such as Kuwait and Saudi Arabia to “open up the spigot” and produce more oil.
But, talk is cheap when it comes from elected officials who don’t write the checks. Promises and speculation about the future don’t make it easier to pay nearly $2 for a gallon of gasoline, and they don’t make it clear why prices in Craig are the second highest in the state. There are other small, rural communities who aren’t feeling quite the pinch.
What people must demand, through their power as consumers, is that gas station owners justify their prices. Just because Congress allows them to keep their profit margins and contract prices secret doesn’t mean they have to, or even should.
This is a time for a gas war if there ever was. If one Craig gas station were to lower its prices, it would profit in the volume of customers.
But, gasoline is a commodity people aren’t ready to live without or boycott, which takes the power from consumers and puts it directly in the hands of suppliers.
The good news is that U.S retail gasoline prices fell to their lowest level in six weeks last week, with regular unleaded fuel dropping 3.2 cents a gallon to an average $1.647. U.S. Federal Reserve Board Chairman Alan Greenspan said gasoline inventories are finally beginning to build now that bottlenecks at refineries are subsiding.
However, Greenspan added: “We cannot be certain that the recent spike in gasoline prices in the U.S. is behind us. Nonetheless, it is encouraging that forecasters are calling for prices to decline.”
But the latest fuel price, based on the Energy Information Administration’s weekly survey of 800 service stations nationwide, is still up 2 cents from a year ago.
The bad news is, though Craig retailers are fast enough to keep up with gasoline price increases, they’re slow to go the opposite direction. While consumers see prices across the nation fall, the dial on pumps in Craig isn’t slowing.