Document text
Oregon Road Conditions & Cams Email Story to a Friend August 29, 2005 Prices at the pump Shedding light on why gas prices are so high in the Rogue Valley By DAMIAN MANN Mail Tribune Why are gas prices in Jackson County so high? As of Friday, drivers were paying a record $2.78 per gallon for regular in the Medford-Ashland area, 18 cents more than the national average and about 10 to 20 cents more than other Oregon metropolitan areas. There’s no one factor driving up the cost of gas locally, analysts say, but they do point to geographic isolation, lack of self-serve stations and something most people don’t know about: "zone pricing," in which oil companies charge whatever the market will bear. Godwin Agbara, assistant director of natural resources for the U.S. Government Accountability Office, blamed the high prices on a lack of refineries in Oregon and about 6 cents a gallon in labor costs for full-service stations. Advertisement Adding to that are escalating diesel costs for truckers who transport gasoline from Eugene and other areas, he said. "You begin to put those kind of factors together and take into account certain sections of Oregon, and you begin to see why the price of gas is higher," he said. The Rogue Valley’s proximity to California, which has some of the highest pump prices in the nation, also could influence local market conditions. Unknown is how much zone pricing affects what you pay to fill up. It’s a practice in which oil companies base prices on specific market conditions. Drivers in isolated markets with little competition, for example, will pay higher prices because they have no other choice. Agbara said it would be difficult to determine how much zone pricing affects the local markets, adding that the oil companies "are very reluctant to talk about it." He said it is difficult even for the GAO to pry out how much in profits oil companies make on gasoline. Ron Planting, an economist for the American Petroleum Institute in Washington, D.C., said zone pricing is part of the marketing strategy of oil companies, but he didn’t know any specifics about the practice. He said zone pricing isn’t unique to the oil industry, citing airlines and hotels as other examples. He did say that for every dollar of revenue from the sale of an oil product — from gasoline to lubricants — the amount of profit averages 7.5 cents. Planting didn’t know what the profits were on gasoline specifically. "We don’t quite get down to that level," he said. When gas prices are adjusted for inflation, they are lower than they were in 1981, Planting said. Translated into today’s dollars, the $1.42 price of a gallon is $3.11, he said. Officials from oil-distributing companies that control most of the supply locally wouldn’t return calls for this story. Two of the biggest companies locally are Hays Oil and Colvin Oil. Some local gas station operators, who refused to be identified, said they believe higher costs for trucking fuel to Jackson County could explain part of the increase, but also said they weren’t sure what was driving prices here. Officials at Kinder Morgan Energy Partners in Eugene, a company that fills the tankers that ship fuel to Medford, also couldn’t be reached for comment. A worker at the company, however, who refused to be identified, thought the prices in the Medford area weren’t justified by higher transportation costs. "I thought the prices seemed awfully high," he said. An average tanker truck transports 11,000 gallons of gasoline and gets about six miles per gallon on the 340-mile round trip to Eugene. That equates to $164 for fuel costs based on $2.90 a gallon for diesel, adding about a penny and a half to each gallon of gas. However, oil distributing companies locally also ship in fuel from Chico, Calif., or Reno, Nev., depending on the availability of gas, which would further add to their costs. By far, the largest single factor affecting overall gas prices nationally is crude oil, which was hovering at about $65 a barrel last week. Last year, crude oil prices made up 48 percent of the cost of a gallon, compared to 60 percent now. State and federal taxes account for 17 percent of the cost of a gallon of gas. Oregon charges 42 cents for each gallon, 2 cents below the national average. Other industrialized countries pay far more in taxes, such as the United Kingdom, Germany and France at about $4 a gallon. Though the GAO hasn’t been able to determine how much profit the oil companies make, it does say profit is reflected in estimates for refining, distributing and marketing, which added together make up 23 percent of the cost of a gallon of gas. Agbara said the GAO is pushing the U.S. Energy Information Administration, which compiles much of the data on fuel consumption, to provide more information about regional gas prices. "We don’t have that level of data, especially for state and local levels," he said. Reach reporter Damian Mann at 776-4476, or e-mail Prices at the pump ">[email protected] . Mail Tribune Home | Local News | Sports | Business | Obituaries | Life | Opinion AP News | Archives | Site Map | Community | Classified Copyright © 1997-2005 Mail Tribune, Inc. All rights reserved. Privacy Policy | Terms & Conditions | Website Feedback www.bingo.com Home Security Systems Trunks, Footlocker dvd-r Distance Education Computer Security Ztech Media Hosting Sports Equipment Online Casino Reviews Student Loans tcg student loan consolidation Online Pharmacy online casino Myspace Home Equity Loans Windermere Van Vleet Rogue Valley Travel Reservationstogo Hotel Reservations Southern Oregon Loans Online Casino News Natto Kinase Nattokinase Casino Gambling Sites Budget Website Templates Investments & Loans Advertisement s