Many Gas Stations Do Not Know Where the High Price Comes From

By Aaron Aupperlee, Desert Dispatch, Barstow, Calif.

May 30–BARSTOW — Annette Funk and Edythe Cosico did not fill the tank of their pick-up truck Thursday afternoon at a gas station in Barstow. At $4.39 a gallon, they could not afford it.

The Las Vegas sisters, driving through Barstow on business, were surprised when they started seeing gas prices eclipse four dollars a gallon at the beginning of the week.

“We’re getting ripped off here,” said Cosico.

Across Barstow, customers and owners of gas stations complained at the pump as prices sailed over $4 for the week. Rajhbir Rana, a manager at Kelly’s Market in Newberry Springs, said the price of oil went up seven cents from Wednesday to Thursday. He does not know why, and neither do managers at several stations around Barstow. At most stations, the price is set by an outof-town corporate office. The phone rings in the morning, and the price for the day is set.

However there is some logic to the setting of gas prices. Brian Kennedy, the vice president of public affairs at the Institute for Energy Research in Washington D.C., said that two biggest factors in setting the price per gallon are the cost of crude oil and taxes. Together, the price of crude oil and taxes make up nearly 84 percent of the cost at the pump. The remaining 16 or so percent is partitioned between marketing, distribution and refining costs.

C a l i fo r n i a , k n ow n fo r notoriously high gas prices, also has a high gas tax. In total, Californians pay 45.5 cents per gallon in taxes. That number can be higher or lower based on local sales and gas taxes, but it is higher than neighboring Arizona, 19 cents per gallon, and Nevada, 32.5 cents per gallon. California’s emission and pollution laws also makes it a market for boutique gas, Kennedy said, a more expensive gasoline that burns cleaner.

Taxes and fancy gas aside, for Mike Hanify, the owner of the Calico 76 station in Yermo, the price of the oil itself makes the biggest difference in the price at the pump. When Hanify first got into the gas station business, gas was 20 cents a gallon. That was 67 years ago and in that time, he has seen demand for oil increase in places like China and India and the supply decrease around the world.

“It’s supply and demand,” Hanify said. “If we don’t do something about the supply, the price is going to continue to go up and up.”

And as the price continues to go up, managers like Rana and Hanify will have to figure out how to make money in the gas business. The high prices at the pump do not translate into more profits in their stores’ registers. Hanify said he has basically given up on profit from his number one product, gasoline.

Rana said he has to decide each day how much he wants to raise prices, walking a thin line between raising them too much and driving customers who might buy snacks and groceries and keeping it too low and losing money.

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Copyright (c) 2008, Desert Dispatch, Barstow, Calif.

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