Gasoline price survey on B1.An organization of local service station owners says it's been a long time since gasoline prices and profits have been as high as they are this week.
On Friday, a Deseret News survey of local stations found the average price of unleaded regular at $1.37 a gallon. That retail price is 8 to 10 cents above the wholesale delivery price.Paul Ashton, president of the Utah Petroleum Retailers Organization, said he doesn't have statistics on past gasoline prices, but he's confident current prices are the highest in about 10 years. After reviewing his records, the highest price he could confirm was $1.30 in 1980.
"It's also the first time in a long time we have made a 10-cent per-gallon profit margin," he said.
For years, independent station owners have complained that intense competition was causing 2-to-4-cent margins. But this week, pump prices shot up 8 to 10 cents a gallon along the Wasatch Front, an increase that retailers had predicted. Ashton said it makes up for the lack of profit the past three weeks as wholesale prices crept up and competition kept retail prices stable.
He doesn't expect the comfortable margin to be sustained, however. Within a week, either wholesale prices will move up or competition will push retail prices back down, Ashton predicted.
But even with the price at a longtime high, it is still below the national average of $1.39-$1.40 a gallon, Ashton noted
"It's the retailers here that have given consumers the advantage," he said.
But Ashton doesn't have to worry about defending his colleagues in the service station business. A Deseret News/KSL-TV poll taken earlier this month showed a large majority of Utahns blame oil companies, not service stations, for high pump prices.
Pollster Dan Jones & Associates found 65 percent point the finger at oil companies, while just 8 percent blame service stations for costly gasoline.
"That blows me away," Ashton said. "I guess I just deal with the radicals. Sometimes I don't even want to go into the office" because of the angry phone calls he gets.
Oil companies aren't surprised by the survey, calling their industry an easy target for people who don't understand the workings of a free market.
"It shows we need to do a better job of explaining to the public the workings of the international and national oil markets," said Jim Peacock, executive director of the Utah Petroleum Association. Oil companies blame rising prices on the Persian Gulf crisis. Sixteen percent of those polled agreed. Two percent didn't know and 10 percent had another explanation.
Peacock explained that whether oil prices are fueled by speculation or fact, the refineries in Salt Lake City have to buy their crude at market rates. And those rates have been going up the past two months as oil companies anticipate shortages caused by war breaking out in the Middle East.
"There's no question it is going up on speculation, but we don't want to be caught short," Peacock said.
President Bush warned oil companies Wednesday against speculative trading and hoarding oil by tapping the nation's strategic petroleum for the first time. He asked that 5 million barrels from the reserve be auctioned to stabilize prices.
But the warning went unheeded Thursday. Reports of a Navy frigate firing warning shots at an Iraqi tanker fanned fears of war, sending crude up 87 cents to $39.54 a barrel. That's nearly double its price before Iraq invaded Kuwait on Aug. 2.
"We thought Bush's action would have a stabilizing influence on prices immediately," said Rick Hagar, a spokesman for American Petrofina Inc., based in Dallas. "But rumors are absolutely running the market."