The Exxon oil spill in Alaska did play a small role in the recent surge in Utah's gasoline prices, but steadily increasing crude oil prices in Utah and Colorado get most of the blame.
Retail gasoline prices were headed up regardless of the Alaska spill. The increase came all at once because refiners, jobbers and retailers held their prices low during the first three months of the year because of a mid-winter lull in demand and because of an extremely competitive market, said Jim Peacock, executive director of the Utah Petroleum Association.Peacock told the Legislature's Energy, Natural Resources and Agriculture Interim Committee Wednesday that the price of crude oil produced in Colorado and in the Uintah Basin has increased steadily over the past six months from $12.75 in November to $20 in mid-April.
Average retail prices, on the other hand, dropped several cents in the Salt Lake area between November and December, then increased only slightly until they surged suddenly to about $1.079 per gallon for unleaded regular the first week of April.
On average, the gross profit to the station for each gallon of gas it sells is 4.1 cents, said Glade Sowards, Utah director of the Western Petroleum Marketers Association. The margin has been much narrower in the Provo area, he said.
"How they survive, I don't know."
The leader of another organization in the state - the Utah Petroleum Retail Association - agrees with Peacock's reflections of the impact climbing crude prices had on gasoline retailers. But Paul Ashton, the retail association's executive director, said the untold story is that the owners of the oil fields have made the retailers suffer while the big companies have been making money all along.
While no major oil company would intentionally blow up an oil derrick in the Atlantic or allow a spill in Alaska, they benefit financially because higher oil prices result, Ashton said. "The crude oil in the ground did not change hands between Nov. 15 and April 12. It's the same people, and they're getting $8 more a barrel for it," Ashton said. "If they could survive at $13 (for crude), then it looks to me like with that kind of an increase, somebody's making money."
Most of the gasoline sold in Utah comes from the Colorado and Uintah basin oil fields. Most of the Alaskan oil, where delivery was temporarily interrupted by the Exxon spill, goes to California and Nevada, Peacock said. The Alaska spill affected Utah prices because buyers in the Las Vegas market drove to refineries in Utah to buy gas when Nevada supplies were low, he said.
Utahns' shop street signs for gas prices and use self-service outlets more than motorists in any other state in the nation, Peacock said, making competition between stations particularly tough.
Holiday Oil President Jerald Wagstaff said he has four field managers constantly scanning gas signs in the valley to make sure the prices at Holiday's pumps are competitive with the others.