Salt Lake's gasoline retailers don't mess around with subtleties.
None of those one- or two-penny price increases for them. No, sir. When they decided it was time to raise gasoline prices last week, they marched out to their pumps and kicked those prices up a whopping 10 cents a gallon.While the increase varied throughout the valley, most stations reported an average increase of 10 cents.
From Bountiful to Sandy, gasoline prices are uniformly $1.04.9 for unleaded, 99.9 cents for regular and $1.12.9 for unleaded supreme.
Retailers say they were forced to jump their prices because the steady rise in wholesale costs over the last two months were eating their profits.
A Chevron station owner said that before Wednesday's jump he was making only a penny profit on every gallon of gas he sold.
"You can't live on a penny a gallon," he said. He boosted his price 10 cents a gallon. "Right now, we're making 11 cents for every gallon we sell. But in a few days, the oil companies will raise their prices and we'll only be making six cents."
Retailers unanimously point the finger at refinery prices. "We have seen the cost per gallon of gasoline in Utah go up 10 percent in the last two months," said Alan Pack, market manager for all Utah 7-Eleven stores south of 39th South.
It would have been bad business to raise gasoline prices every time the wholesale price went up, he said. "If you raised your retail cost a penny every time the cost went up, you would develop a very poor image in the eyes of the consumer."
Instead, gas stations waited and then passed the higher costs on to the consumer in one dramatic price boost.
Area 7-Eleven stores raised their prices an average of 10 cents last week, he said. The Deseret News interviewed the national price managers of two major oil corporations. Both men - one in Los Angeles and one in Oklahoma - said refinery problems in the Rocky Mountain region and along the West Coast are responsible for the hike in refinery prices during the past two months - a hike Utah consumers will be living with for the rest of the summer.
A Texaco refinery unit in Billings, Mont., was down for several weeks, said James Huccaby, manager of pricing for Chevron, U.S.A.
That created a gasoline shortage in Colorado. Some of Utah's supply was shipped to Colorado, whittling the overall gasoline supply in the Beehive State, Huccaby said.
Along the West Coast, Exxon, Chevron, Tosco and Pacific Refining all have refinery units down, Huccaby said.
"The West Coast has had serious refinery problems," concurred Gene Roeder, manger of price and supply for Phillips 66 Co.
That means those major refineries are producing less gasoline at a time when summer demand for gas is at its peak, the men said.
"It's basic supply and demand," said Roeder. "Supply is a little tight and demand is real strong right now in the Salt Lake area."
Demand is high everywhere. Huccaby said demand along the West Coast is the highest it has been in six years. Meanwhile, oil inventories along the West Coast are down 5 million barrels from this time last year. The Mountain West has a shortage of similar proportions, he said. The low supplies have simply driven the price up.
Chevron's Utah gasoline sold to wholesalers for 57 cents a gallon on July 11. A month later, the price for wholesalers - called the "rack price" - had jumped to 62 cents a gallon.
That's a far cry from the $1.04.9 we are paying. But first Utah tacks on its hefty 19-cents-per-gallon tax - among the highest gasoline taxes in the country. Then the wholesaler ships the gasoline and adds shipping expenses to the price. Then he takes his profit, hiking the price again. Then the retailer takes his profit, raising the price yet again.
By the time the state gets its tax money and everyone else gets his profit, Utahns are paying $1.04.9 a gallon for unleaded gasoline.
Lest anyone expects refineries, wholesalers or retailers to overlook their profits in deference to people's pocketbooks, Huccaby sets the
"I can't reiterate it enough: We're in the business to make money or we wouldn't be in business. Apparently, people don't care for the oil industry to make money. But that's why I'm here. That's why I have a job. We have to pass along our added expenses."