Gas price study finds increased profit margins

A state investigation into Utah's relatively high gasoline prices says gasoline retailers are gouging consumers, but are not breaking any state laws.

Deseret Morning News graphicState report on gas prices in UtahRequires Adobe Acrobat.

On Sept. 15, Gov. Jon Huntsman Jr. called on the state Department of Commerce to investigate Utah's gasoline prices, which at that time averaged $2.92 a gallon, fourth highest in the nation.

Even as the gasoline prices began a dramatic fall across the nation, prices in Utah didn't budge.

"It appears that some retailers took an opportunity to increase profit margins as wholesale prices began to decrease," said the state report, released Friday. "The profit margin for gasoline is small, often only a few cents per gallon. It appears, however, that during recent weeks some retailers have been making a profit margin several times greater than average."

At the time that the investigation was launched, gasoline retailers and oil refiners blamed Utah's higher than average prices on the state's isolation from Gulf Coast states, which had oversupplies of refined product.

About 30 percent of Utah's crude oil comes from Canada, 15 percent from within the state and the rest from Colorado, Montana and Wyoming.

The state report recommended three potential further actions to lower retail gasoline prices, including increasing supply, reducing demand or regulating and monitoring the industry. The latter, the report said, could mandate increased transparency in profit margins.

Of the 24 retailers to which the department submitted information requests, only four provided information. Four of Utah's five refineries cooperated with the department's request.

"Most telling from this investigation, though, is the type of information the refineries and retailers were not willing to provide," the report said. "Because of the failure of the refineries to provide crude oil prices, it is impossible to determine whether recent profit margins for the refineries were an aberration similar to the retail margins."

John Hill, executive director of the Utah Petroleum Marketers and Retailers Association, said gasoline retailers are not gouging customers and are currently only making roughly a 6 percent gross margin on a gallon of gasoline — a gross profit of $1.87 on a 12-gallon fill-up.

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