'Gouged? Absolutely' — Report says gas retailers taking advantage, lawfully

A state investigation into Utah's relatively high gasoline prices found that retailers are gouging consumers — but they are not breaking any state laws.

On Sept. 15, Gov. Jon Huntsman Jr. called for a Utah Department of Commerce investigation into the state's gasoline prices, which at that time averaged $2.92 a gallon, fourth highest in the nation, according to AAA. Even as prices began a dramatic fall nationwide earlier in September, they barely budged in Utah.

"It appears that some retailers took an opportunity to increase profit margins as wholesale prices began to decrease," said the Commerce Department 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."

On Friday, a gallon of regular unleaded gasoline in Utah averaged $2.55, which was 30 cents higher than the national average of $2.25, according to AAA.

Paul Callister, president of Salt Lake-based Premium Oil Co., which operates 14 service stations in Utah and Idaho, disagrees with the state's findings. Callister said his company was losing money the first six months of this year.

"During the first part of the year the bank card people were making far more per gallon than we were per gallon," Callister said. "There were hardly any margins at all for the retailers. The retailers have not been dropping their prices as fast because they are trying to make up for what they lost the first part of the year."

Deseret Morning News graphic State report on gas prices in Utah Requires Adobe Acrobat.

But Francine Giani, executive director of the Commerce Department and head of the investigation, laughs at such reasoning.

While Giani said the state could take some regulatory action against retailers, such as mandating increased transparency in profit margins, she did not offer any specific course. Instead, she suggested that a new pipeline or refinery could be built in the Salt Lake market to offer additional refined supplies.

Giani added that consumers should shop around for the cheapest gas and use public transportation where available.

"Are we being gouged? Absolutely," Giani said. "Consumers' best ammunition is to shop around and to maybe do some of these voluntary things which cause them to drive less."

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