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Gas prices skyrocket

by Linda Hiller

Hold on to your gas caps. If prices at the gasoline pumps continue their upward spiral, you could be parking the RV in the back yard this summer instead of driving to your favorite campground.

In the last two weeks, gasoline prices have increased by an average of 12 cents per gallon, the largest increase since 1990, according to a survey by the Automobile Association of America, widely regarded as one of the most authoritative sources of nationwide gasoline price information.

On Feb. 17, the lowest price for retail gas in the Valley was 91 cents per gallon for gas that is now $1.45 – representing a 62 percent increase.

A survey of prices around the Valley Thursday yielded a high of $1.55, $1.65 and $1.75 for unleaded regular, mid-grade and premium gas, respectively, at the Winner’s Corner Chevron, the 76 station adjacent to the Carson Valley Inn and one 7-Eleven in the Gardnerville Ranchos.

The other 7-Eleven in the Ranchos was priced at $1.52, $1.62 and $1.72., the Shell station was priced at $1.49, $1.59 and $1.69 and the lowest prices were at the Beacon, Exxon and both Arcos, at $1.45, $1.55 and $1.65.

In Carson City, gas prices were slightly higher at corresponding company stations. At Borda’s Arco, the price was $1.48, $1.58 and $1.68; and at the Carson City Shell station, the price was $1.53, $1.63 and $1.73

– Valley residents feel it. In spite of the sudden increase, Carson Valley residents continued to gas up as prices rose. At the Winner’s Corner Chevron, Troy Moritz, 35, a single mother of two boys who works at Valley Meadows and lives nearby in the Gardnerville Ranchos, said she is aware of the higher prices but is not overly upset.

“I hardly ever look at the prices anyway,” Moritz said, as she pumped $1.55 per gallon unleaded gas into her Toyota Tercel. “I do admit that since I’ve heard so much about the higher prices in the news lately, it does make me pay more attention, though.”

Moritz said she generally buys gas at the same place and even though “her” Chevron station is one of the highest, she feels the quality of gas she gets is worth the extra cost.

“I know the price will come down eventually,”she said. “It always goes up in the spring and comes down in the fall, anyway.”

Chevron personnel at Winner’s Corner were not allowed to comment on the price hikes, and a call to the corporate office in Reno yielded the same “no comment.”

– Understanding the causes. Experts and gas-pumping customers have struggled to understand the root of the sudden price increase, but the complexity of the business of crude oil and its journey to the consumer is a complex one, according to one Nevada expert.

Peter Krueger, state executive with the Nevada Petroleum Marketers and Convenience Stores association, said there are many factors in this latest price increase, but he hastened to remind gasoline customers that this is nothing new.

“Prices always fluctuate. It’s a delicate balance, and one of the contributing factors is the fact that the true independent retailer is about gone,” he said. “They used to keep pressure on major oil companies to keep prices down, but they’re dwindling.”

Krueger also cited the Organization of Petroleum Exporting Countries (OPEC) as another of the factors in the price increase. They have agreed to a plan to take 2.1 million barrels of crude oil daily off the market, cutting world output by 3 percent, which factors into the supply and demand aspect of the petroleum business.

Krueger said Minden and Gardnerville really have no independent gas retailers, and explained that the only true independent in the area is Eagle Gas in Carson City.

Independents, who buy surplus gas at a discounted price from the major refineries, have traditionally been able to offer customers lower prices, providing competition in the bigger picture. With their demise, the lack of a governor on gasoline prices makes higher prices almost inevitable, he said.

– There’s only so much. Now, Krueger said, owners and station managers are under pressure to keep their businesses running with just enough net income to make it profitable, while not out-pricing themselves so customers stop coming.

“Plus, they’re all on allocations,” he said. “This means if one guy prices his gasoline too low and he gets a run on gasoline, he could run out of gas before the month is up, and once it’s gone, they can’t get more. That would be a disaster, to be out of gas and have to close down for the rest of the month.”

– In retrospect. Perhaps the more germane question to ask about gasoline prices is, why were they so low in early February?

“We had a mild winter and so the refineries probably weren’t making as much heating oil and, instead, the gasoline was in greater supply,” Krueger said. “We got spoiled with those prices, and when that happens, people remember the low price and forget that it had been high prior to that drop.”

Krueger said the average price for gas in Nevada for mid-grade gasoline in the month of February was $1.25 in 1996; $1.35 in 1997; $1.17 in 1998 and $1.08 in 1999. Even though prices as high as $1.81 have been already reported at Lake Tahoe, he said that the trader press has already predicted that the price could go up to $2 per gallon, particularly with the coming spring and summer demand increases.

Krueger also referenced the fires and explosions in California oil refineries that have contributed to the price increase, especially in the West. He said that one of the factors not often cited in price fluctuations is the fact that gas is a commodity and traded as such.

“Gas is a commodity, just like pork bellies,” he said. “Speculators buy and sell commodities, including gas, based on what they think the prices will do. This affects prices in the whole industry.”

n Don’t forget the taxes. Krueger said the taxes added on to a gallon of gas are important, but not crucial, to the final pump price. Washoe County takes 54 cents on each gallon in taxes and other counties are comparable, with Douglas County at least 5 cents less than Carson City, due to Carson’s nickel per gallon tax.

Here in the Carson Valley, prices are slightly lower due to these lower gas taxes. The differences in price between communities for same-named companies doesn’t always reflect this nickel difference, Krueger said, because pricing is up to the individual station operator.

“I’m not going to say that there are never refineries or dealers that don’t take advantage,” he said. “But, most of the owners I’m in touch with feel they’re being squeezed now and their concern is that the retail price may be too low, but they don’t want to go too high and alienate customers.”

Brandon Garden, 18, a Volkswagen mechanic from the Valley, said he does feel gas prices are unfairly high.

“It stinks – they take advantage of everybody because we always need gas,” he said as he filled his small truck at the Winner’s Corner Chevron. “I do think it will go down next winter, though.”

“Tell everybody to buy a Volkswagen,” said Garden’s father, Mike, the owner of a Volkswagen repair business.