Who fuels gas prices?
By MICHAEL SCHULER, Times Leader Staff Writer
When motorists go to the pumps, consumers are no longer paying for the
cost of fuel. They are paying what others “think” the price will be in
the future.
Supply and demand, oil shortages, refinery troubles, war . . . aren't
the culprit as they have been in years past. No, according to local
distributors -- today's gas prices are now under the influence of
investment banks and brokers who in just the past few years began
selling crude oil on the futures commodities market in a manner similar
to selling cattle or oranges.
“There is no shortage problem. We don't have any trouble getting the
product,” said Doug Cash, president of Belmont Carson Petroleum. “It's
more about market speculation. Worldwide, demand is increasing and
that's part of the reason why, but most of it's speculation.”
According to Cash, crude prices were once set by “supply and demand,”
but around 2000, deregulation of the industry changed how the price of a
barrel of crude is determined.
“It's traded like stocks are now,” Cash said. “It didn't use to be that
way. But now, you can buy futures of crude oil which is driving the
price up and down.”
Crude prices are traded on the New York Mercantile Exchange.
The result has been higher prices at the pumps, but those benefitting
from the increase are not the gas stations where motorists buy gas.
The prices are cutting into the business of Belmont Carson Petroleum,
which buys fuel from the major oil companies.
“It's killing us. First of all, we are a delivery company, not an oil
company -- we don't actually have any wells,” Cash said. “Our trucks get
5 miles a gallon and diesels $4.30 a gallon so the prices are hitting us
hard, too.”
Another common misconception is that gas stations are profiting from the
increase. Despite the brand names on the illuminated signs in front of
most service stations, the Ohio Petroleum Marketers and Convenience
Store Association reports fewer than 3 percent of convenience store gas
stations are owned by major oil companies. And the few stations that are
owned by the major oil companies are being sold off, Cash said.
According to Don Crozier, one of the owners of Shadyside Pennzoil in
Shadyside, his station only makes 3 cents per gallon.
Because he tries to keep his prices low and competitive, Crozier said he
has been attracting plenty of business from customers in both Ohio and
West Virginia. However, customer spending habits and the popularity of
debit and credit cards are starting to take a toll.
Every swipe of a card results in an 8 cent transaction fee for the
station, plus a 2 percent batch fee charged at the end of the month,
Crozier said. While some customers fill up their tanks every time they
pull into a service station, there are others who prefer to buy a fix
dollar amount of gas every time they pull up to the pump. With credit
card fees and higher gas prices -- the result is a loss for a business
owner -- especially when $10 worth of gas used to buy 5 gallons and now
only gets a customer 3 gallons.
“What kills me is when somebody gets $10 worth of gas and uses their
debit card,” Crozier said. “I make 3 cents a gallon, so on that
transaction I just lost 2 cents.”
Crozier said he has actually considered removing the credit and debit
card option for fuel purchases.
Cash also said the current prices and oil companies make it impossible
to give credit to their customers.
“The oil companies don't give us any terms and make us pay anywhere from
five to 10 days,” Cash said. “With a tanker load of fuel costing over
$30,000, nobody has that kind of money. It's tough to give anybody credit.”
As far as consumers go, there are a few things that motorists can do to
get better gas mileage. They can drive on properly inflated tires and
slow down.
Simply not buying gas for a day or two won’t do anything to cut the
price of fuel -- especially since the major oil companies have long ago
sold their ownership in service stations.
“Those stations are owned by local people,” Cash said. “So when people
say they are going to boycott Exxon or do something like they, all they
are doing is hurting their neighbor.”
Article Source ______________
Joel Adams
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