Gasoline 'gouging' elicits a rebuttal

Consumers are cheering the findings of a state investigation into higher-than-average gasoline prices, but one economist for the oil industry is downplaying the suggestion that Utahns are being gouged.

On Friday, the Utah Department of Commerce issued a report that said Utah's gasoline retailers took advantage of consumers as wholesale prices began to decrease but concluded that retailers were not breaking any state laws.

Rayola Dougher, manager for energy market issues and an economist for the American Petroleum Institute, said Utah's gross profit margin for retailers is not out of line with other cities.

Typically, Dougher said, retailers make 10 cents to 15 cents gross profit on a gallon of gasoline. According to a Lundberg survey, Salt Lake retailers in the past week were making 18 cents a gallon on average.

Dougher said that compares with a 20-cent gross profit margin during the same period for Portland retailers, 14 cents in St. Louis and 10 cents in San Francisco.

"The fact that Salt Lake is 18 cents is not extraordinary," Dougher said. "So you've got a few pennies extra. Your prices appear to me to be following in lockstep with what's going on with crude oil. Your prices are falling the way I would expect them to."

John Hill, executive director of the Utah Petroleum Marketers & Retailers Association, said Utah's gasoline retailers typically make a 3 percent gross margin on a gallon of gasoline, or about 8 cents per gallon. But as wholesale prices for retailers dropped in late August and September, retailers saw their margins double to about 16 cents on a gallon of gas.

Francine Giani, executive director of the Utah Department of Commerce and head of the price investigation, is not backing down from pointing the finger at retailers.

"What we're talking about is a commodity that is necessary for folks in many instances to get around, to make a living," Giani said. "And if they feel happy with those margins, which are gouging consumers, then that's unfortunate."

Giani said she has received numerous calls and e-mails from people thanking her for her efforts. She also said she has heard from several legislators.

"There are many (legislators) out there that are taking a hard look at what we've provided to the governor, and the next three months will be an interesting place to watch here in Utah," Giani said. "I've talked to folks from the Latino community. I've talked to low-income people, and this is really hurting them. When I have a retailer tell me, 'You bet I'm making profits, more than I've ever made in years past,' that's sad."