Gas Prices Keep Getting Pumped Up
By Wendy Brown, The Santa Fe New Mexican
Mar. 25–Gas prices have climbed in the past few weeks, but competitive pricing remains in Santa Fe — especially at gas stations near Sam’s Club.
While many stations far from Sam’s set prices at $2.69 Friday, those close to the membership-only discount gas station had much lower prices.
The price at Sam’s Club at about 9 a.m. Friday was $2.47 a gallon, while a Chevron station less than a mile away on Rodeo Road sold gas for $2.52. The nearest Giant station to Sam’s Club and a Shamrock station also sold gas at that price. But the long lines at Sam’s showed that drivers were not checking other prices nearby before pulling in there.
About a month ago, Santa Fe’s gas prices were much cheaper — $2.07 to $2.39 depending on the station. But AAA New Mexico reported Friday that the New Mexico area’s average gas price is $2.50, up almost 8 cents from last weeks’ average price.
Brenda Yager, AAA New Mexico spokeswoman, said gas prices are high because refineries recently began producing cleaner-burning fuels more suitable for summer temperatures. The change usually causes higher prices because production is slower and there is less inventory, she said.
Also, demand is up and refinery output is lower than a year ago, Yager said.
Additionally, prices started high this year and international political issues have helped create uncertainty about the world’s oil supply, Yager said.
Earlier this year, Santa Fe’s gas-station owners broke a longstanding tradition of having nearly uniform prices throughout the city.
But while stations now have different prices, Santa Fe’s average price of $2.62 a gallon is still the highest in the state, according to AAA New Mexico. Albuquerque’s average price is $2.55 a gallon.
Ruben Baca, executive director of the New Mexico Petroleum Marketers Association, said recently that Santa Fe’s gas-station owners appear to be competing more aggressively because of Sam’s Club’s low prices.
But Charley Brewer, a Santa Fe gas-station owner, disagrees. He attributed fluctuations to Hurricane Katrina, and added: “A lot of this is based on the world market. We can’t control any of it.”
Brewer said he sets his prices by looking at gas stations throughout the city, checking prices at the loading “racks” where gas-station owners pick up their fuel and considering the traffic patterns at individual stations.
Brewer can also point to pricing patterns supporting his theory that nearness to Sam’s doesn’t shape what other stations do.
For example, Allsup’s stations, no matter where they were located, sold gas for $2.52 or less Friday. One Allsup’s station on Cerrillos Road sold gas for $2.49 a gallon. And one of Brewer’s National Petroleum News, said Santa Fe’s gas prices are tied to local supply changes more than fluctuations in the price of crude oil.
Also, the cost of crude oil isn’t immediately reflected in gas prices because refineries usually have an excess supply of crude oil on hand, he said.
Some refineries also sign contracts that lock them into a lower price for crude oil for an extended time, Bevers said.
Olan James, a Sam’s Club spokesman, said the company tries to have the lowest gas prices in the city, but the price fluctuates with the market. The company does not always try to be a certain number of cents cheaper than its competitors, he said. stations on the north end of Cerrillos Road sold gas for $2.52.
But not all Santa Fe’s pricing changes are a result of the world market. Brewer said an Allsup’s on Cerrillos Road near Peerless Tyre Co., a discount gas seller, has started to keep its prices in line with Peerless.
And the nearby Giant station began lowering prices to lure more customers, Brewer said. “This seems to have caused a lot of activity in the market,” he said.
In 2004, 47 percent of the cost of a gallon of gas was determined by crude-oil prices, 23 percent by federal and state taxes, 18 percent by refining costs and profit, and 12 percent by distribution and marketing, according to the federal Energy Department. At that time, the average price of gas was $1.85 a gallon and the average cost of a barrel of crude oil was $36.97.
The cost of a barrel of crude oil hit $64 this week, according to The Associated Press.
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