Jonathan J. Higuera
The Arizona Republic
Aug. 20, 2003 12:00 AM
Ernestine Williams wasn't happy paying $3.49 a gallon for unleaded gas Tuesday,
but it didn't stop her from buying it.
If she had traveled down the road a bit and been willing to sit in a longer
line, she could have gotten a better deal, somewhere in the $2-a-gallon range.
But after two stops, one at a closed station and another at a station that
ran out of gas, she bit the bullet.
"I went in there and told him I didn't have a choice but to shop here today,"
she said.
Industry experts said the high fluctuating gas prices seen by Williams and
other Valley drivers will continue increasing as long as supply is low and demand
is up.
"We're seeing price increases from the wholesale level sometimes two or
three times a day," said Luz Rubio, executive director of the Southwest
Automotive Trades Alliance, which represents independent gasoline dealers.
One reason for those price increases is the additional transportation costs wholesalers are paying to truck fuel from Tucson and other places to the Valley. But that shouldn't add more than 15 to 20 cents a gallon, said David Cowley, a spokesman for AAA Arizona.
Some relief could come for consumers as the Environmental Protection Agency
waived the required use of the specially blended fuel for Maricopa County.
But in the somewhat mysterious world of gas pricing, nobody could say when
or if prices will level off or drop.
"When we start seeing more gas stations with product, then we'll start
to see some relief on prices," Rubio said.
The average wholesale price for a gallon of gas on the volatile spot market
was $1.51 on Tuesday. Last August, the price was about $1.08 a gallon.
The price was less for gas headed to brand-name stations, such as Chevron and
Shell, and higher for independent dealers with no affiliation to a brand.
The independents don't operate under long-term contracts that branded dealers
have and must buy gas on the spot market.
Then there is the distinction between branded company-owned stations and branded
independent stations, essentially stations that carry the name but are independently
owned.
Company-owned stores typically have better prices.
Better prices or not, the cost of a gallon of gas has shot past $3 at some
stations.
AAA's Cowley said any dealer charging more than $3 a gallon may be gouging.
"Some dealers have increased prices claiming that will slow usage,"
he said. "The last 24 hours have proven that wrong."
At the Diamond Shamrock at 51st Avenue and Buckeye Road, regular unleaded was
selling for $1.99 a gallon. The store received 8,000 gallons at 8 a.m. Tuesday
after being out since Saturday.
"It's moving pretty well," said a manager who declined to be identified.
But at Valero Energy Corp., which owns and supplies Diamond Shamrock, holding
the line on prices is costing them, said spokeswoman Mary Rose Brown, who is
based in the San Antonio office.
"We haven't been covering costs for the last week," she said.
None of the companies supplying gas would disclose how they set their prices
other than giving generic descriptions of evaluating supply, demand and competition.
"We're seeing the street set the price," said Santana Gonzalez Jr.,
an Orange County-based spokesman for ChevronTexaco.
The company sets prices for the stores it owns by surveying local competition.
Although 115 stores carry the Chevron name, fewer than 20 percent are company-owned,
he added.
"We can't tell an independent retailer how to set their own prices,"
he said. "They run their own businesses, and we supply the gas."
ConocoPhillips owns Circle K and supplies gas to more than 300 Valley gas stations,
including 255 company-owned stores. Spokeswoman Julie Igo said the company has
no control over prices set by independent dealers, even if they are supplying
the gas.
"We can only encourage them to act responsibly in matters of pricing," she said.
Staff reporter Judd Slivka contributed to this article.
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http://www.azcentral.com/arizonarepublic/news/articles/0820gas-prices20.html