Each week our local paper publishes a list of current gasoline prices taken from various locations around the state. Each week our area is one of the highest, if not the highest. And each week I ask myself “Why???” We even have an oil refinery here, for crying out loud! Ours should be lower!
Evidently I’m not the only person who has wondered about this. Our Sunday paper addressed the issue today. Turns out there aren’t any simple answers.
Gasoline distributors purchase fuel at a set price, which is called the “rack price”, from refiners and then sell it to the station owners who market it to folks like you and me. State and local taxes are added to the rack price. The difference between this and what we pay at the pump is the profit which is split between the station owners and the distributors. How are these prices set and profits divided? The actual formula is unknown since they are set as private contracts between the distributors and gas stations.
Despite having a local refinery, much gasoline in South Arkansas is shipped in from Louisiana. This adds an additional factor of trucking costs (even for gasoline from the local refinery). According to the article, NW Arkansas receives much of its fuel from West Texas via pipeline. Gasoline from that area might be set at a lower cost which would account for lower prices in that part of Arkansas. Brand name gasoline prices can factor into the local pump price as well.
Ann Hines, executive director of the Arkansas Petroleum Retailers Association was quoted as saying that the industry is “anything but easy to understand” because there are so many different variables that factor into the pump price. She then likened it to going to Wal-Mart and looking at milk prices. Different brands have different prices. Go to your mom and pop store and the prices will be even higher. The same is true for gasoline.
Am I satisfied with the runaround…oops, answers given to my questions on area gas prices? Not really. But at least I know I haven’t been alone in wondering.
Evidently I’m not the only person who has wondered about this. Our Sunday paper addressed the issue today. Turns out there aren’t any simple answers.
Gasoline distributors purchase fuel at a set price, which is called the “rack price”, from refiners and then sell it to the station owners who market it to folks like you and me. State and local taxes are added to the rack price. The difference between this and what we pay at the pump is the profit which is split between the station owners and the distributors. How are these prices set and profits divided? The actual formula is unknown since they are set as private contracts between the distributors and gas stations.
Despite having a local refinery, much gasoline in South Arkansas is shipped in from Louisiana. This adds an additional factor of trucking costs (even for gasoline from the local refinery). According to the article, NW Arkansas receives much of its fuel from West Texas via pipeline. Gasoline from that area might be set at a lower cost which would account for lower prices in that part of Arkansas. Brand name gasoline prices can factor into the local pump price as well.
Ann Hines, executive director of the Arkansas Petroleum Retailers Association was quoted as saying that the industry is “anything but easy to understand” because there are so many different variables that factor into the pump price. She then likened it to going to Wal-Mart and looking at milk prices. Different brands have different prices. Go to your mom and pop store and the prices will be even higher. The same is true for gasoline.
Am I satisfied with the runaround…oops, answers given to my questions on area gas prices? Not really. But at least I know I haven’t been alone in wondering.
3 comments:
hmm.... I filled up last week at my favorite gas station for $1.99.
Not sure what it's going for at the moment. I'll find out when I need gas next week.
I could go to 5 different gas stations around me and get 5 different prices.
I'm not complaining about $1.99! LOL!
Actually, that should have read $1.99 a gal!!! LOL!
I was pleased to fill up at $2.25/gallon this weekend.
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