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Valley Gas Prices Among Nation's, State's Cheapest

Posted on: Wednesday, 2 November 2005, 18:01 CST

By Tony Vindell, Valley Morning Star, Harlingen, Texas

Nov. 2--HARLINGEN -- Gasoline prices in the Rio Grande Valley are among the lowest in the nation, and that's news to the AAA-Texas.

Rose Rougeau, an AAA spokeswoman in Houston, said the lowest price she has heard was $2.30 per gallon in the San Antonio area. Nationwide, it was $2.48, she added.

"But $1.92?" she said. "That is probably one -- if not the one -- of the lowest prices in the nation today."

Rougeau said the automobile association checks gas prices all over the state but did not have the prices for the Valley on Tuesday.

Various gasoline price-watchers -- the automobile association and trade groups -- don't have an explanation of why gas is cheaper here.

"If you live in the Valley, you are getting a great bargain today," Lynton Allred, spokesman for the Texas Petroleum Marketers and Convenience Stores Association, said. "It's leading the way and I believe that gas prices would continue to go down."

However, he said that paying less than $2 for a gallon, or more than 50 cents less than the statewide average, could be a short-lived marketing strategy.

Allred said the prices Valley consumers are paying are probably below what retailers pay.

Retailers make from 3 to 4 cents on every gallon of gasoline sold.

Last year, Allred said, they made about 13 cents per gallon overall but that was in gross profits.

For the Texas Petroleum Marketers and Convenience Stores Association, the average price was $2.45 in the Lone Star state.

The nationwide average price for a gallon of regular unleaded gasoline was $2.48 on Tuesday, according to the U.S. Energy Information Administration.

And if a cash discount card is purchased at some Circle K stores or at a Murphy USA filling station, the prices drop to $1.89 per gallon. Without the card, both are selling a gallon of regular unleaded for $1.92.

H-E-B, for example, is selling a gallon of the three grades of gasoline for $1.92, $2.02 and $2.12, respectively.

Selling gasoline is regulated by state and federal laws, meaning each of the two governmental entities keeps a percentage of the sales.

Allred said that 38.4 cents from every gallon sold goes to the state and federal governments. The state keeps 20 cents and the federal government gets 18.4 cents.

Out of a gallon of gas, 42 percent of the price represents the cost of crude oil. Taxes make up another 29 percent while the cost of refining crude into gasoline takes another 16 percent.

The remaining 13 percent goes to cover such costs as transportation, storage, costs to operate a convenience store and credit card fees, as well as other expenses.

Allred said that where a convenience comes ahead, though not necessarily all the time, is in the products its sells inside the shop.

"At those (gasoline) prices they are probably losing money," he said when told about the Valley, "but it's primarily a competitive situation of the market place."

He said a convenience store might sell cheap gas, but it sells other consumer products at higher prices.

"Convenience is expensive," he said. "That is how they make money."

AAA-Texas' Rougeau also predicts that price could drop further because the demand for gasoline has dropped to an all-time low in the last 10 years.

As to how the retailers set their prices, Rouge said that is up to individual stores.

But consumers like Yolanda McPhail and Alicia Beltran said that today's gas prices are a big relief from September when a gallon of unleaded gasoline sold for $2.99 and up.

"Less than $2 a gallon, that is great," Beltran, a San Benito resident, said while filling the tank of her van at the H-E-B pumps there. "Let's hope is keeps going down."

It took her $30 to fill it up, she said, compared to $40 she paid during October.

"This is new for me," McPhail, a beautician, said as she pumped gas at the Murphy USA station here. "It was about time."

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To see more of the Valley Morning Star, or to subscribe to the newspaper, go to http://www.valleystar.com.

Copyright (c) 2005, Valley Morning Star, Harlingen, Texas

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

MUR,

Source: Valley Morning Star (Harlingen, Texas)

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