Peak Oil News: PAIN at the PUMPS - Runnin' on empty

Wednesday, August 17, 2005

PAIN at the PUMPS - Runnin' on empty

Grant County News

By Sarah Adams, Staff Writer

Many Grant County citizens are beginning to feel like the gasoline industry is playing a cruel joke on them.

Gas prices have skyrocketed in recent weeks to an all time high. Consumers are left to speculate why the price of gas keeps rising, even though they are certain about the effect on their pocketbooks.

Franklin Sparks, of Crittenden, sat in a line four-vehicles long on Tuesday morning to take advantage of the weekly discounted gas price at the BP station in Crittenden.

Sparks has memorized the gas discount rotation of filling stations in his hometown, so he frequents various gas stations on various days.

"Tomorrow they will discount prices across the street," Sparks said of the Marathon station. "I'm like everyone else. I've got to get it as cheap as I can."

Sparks travels to Walton and Newport to help his family operate their two restaurants, the Main Street Family Caf� and Sis's Family Caf�.

"I think it is ridiculous," Sparks said of the ever-increasing gas prices nationwide.

"We've all got to get to work, and the gas companies know that."

Sparks pays $65 to fill his pick-up truck and says the cost of gas has limited his once monthly trips to visit his father in Georgia.

Sparks doesn't know exactly why gas prices are rising; he thinks it could be related to the war in Iraq, the depletion of natural resources, or gas companies trying to make more money. The one thing he is certain of is it doesn't make sense.

The Gasoline Breakdown: Where Does The $2.69 Go?

Mindy Piles, general manager of Grant County Oil, explained the process of getting gasoline from the ground to the automobile.

Gasoline begins as crude oil pumped from the ground. Although most consumers think of gas production beginning in the Middle East, Piles said crude oil comes from all over the world. Russia, Canada, Africa, South America and the United States are all in the crude oil business with the Middle East.

Piles said the United States Energy Department has calculated that 49 percent of the consumers' cost of gas goes to crude oil production costs.

"That crude oil has to be refined," Piles said of the second phase of gasoline production. "That's where it is turned into gas, kerosene and fuel oil.

Marathon, the brand of gasoline purchased by Grant County Oil, pipes 25 different types of crude oil to seven refineries.

According to the U.S. Energy Department, 13 percent of the customers' cost goes to fund the refining process.

After crude oil becomes gasoline, it is sent to distribution points or terminals where it is picked-up and delivered to gas stations across the country. Grant County Oil has their own trucks to pick-up gas, but some stations have their gasoline shipped to them.

This phase of the process makes up 10 percent of customers' cost.

While $1.93 of every $2.69 per gallon of gas is spent on getting fuel from the ground to the car, the government still has to collect tax on the gas.

Piles said there is an 18.4 cent national tax on every gallon of gasoline and an 18.5 cent state tax on every gallon of gas. Totaling 36.9 cents, $2.30 of the $2.69 per gallon is gone before gas stations set their prices.

This means, gas stations should average a 39-cent profit on their gasoline per gallon when they set their price at $2.69 per gallon.

Why Are Prices Rising?

Although the process is set out mathematically, prices continue to rise.

Piles said this is due to speculation among crude oil producers.

"What's happened with crude oil is that it's a commodity and it's being traded," Piles said. "A lot of speculation, including the health of the prince of Saudi Arabia, is driving the price up.

"It's not the oil companies that are driving the price up, but they do benefit," she added.

The explanation seems basic, but it doesn't change the frustration for consumers like Franklin Sparks.

"They say they (gas companies) have plenty of gas, but the next minute they're raising the price," Sparks said. "If you've got two cars, you've got to be frustrated."

One thing Sparks is appreciative of is the discounted gas offered by local filling stations.

The sign in front of the BP/Ezy Stop, owned by Larry Spears, advertises gas at $2.55 per gallon. However, the price is even cheaper when customers reach the pump where it reads $2.46 per gallon.

Billie Henage, an employee at Ezy-Stop, said they have been offering the discounted price for eight months as a way to ease consumers' pockets.

"We don't follow the trends of other businesses," Henage said of how they set their gas prices. "We have a percentage we want to make."

Henage said their gas prices change daily.

"The price of gas changes daily. It's jumping 4 to 6 cents everyday," Henage said. "We get a load of gas late Monday night, so the price we pay per gallon determines how much we have to charge per gallon."

Henage said the number of "drive-offs" has not increased along with the price of gas, but she said it is more costly now that gas is more expensive.

"We have to watch for them," Henage said of customers not paying for their gas. "It's more of a financial strain now.

"I get up at 4 o'clock in the morning to come to work," Henage added. "Why should I have to pay for other people's gas?"

Henage said they have tried to enforce the pre-pay rule at their BP station in Williamstown, but it was not a success.

"It's inconvenient for the customers," Henage said.

While some customers, like Sparks, are constantly looking for the best price, other customers are loyal to a certain filling station or brand.

While customers waited in line at the BP across the street, Amanda Newman pulled right up to a pump at the Marathon station.

Newman, of Crittenden, has a gas card at Marathon. That is where she fills-up no matter what the price.

"I like to get it on a bill at one time," Newman said. "It helps keep me organized."

Although Newman was unaware of it at the time, Marathon also offers discounted gas to their customers every Wednesday.

Krista Wagers, the manager of Marathon in Crittenden, said the company has been discounting gas for four years.

"They'll (Piles from Grant County Oil) call us tonight and say, 'This is how much you can discount it,' and we will offer that price from 5 a.m. until 11 a.m.," Wagers said of the process that occurs at the four Marathon locations in Grant County. "It's busy. You have to have at least two people working the registers."

Even Wagers, an employee in the fuel industry, believes that gas prices are outrageous. However, Wagers, like so many, doesn't know of a solution.

"I guess it would take a lot of people not driving for a few days," Wagers suggested. "But that will never happen."

Impact On Other Businesses

Sylvia Huhn is a Grant Countian who might experience the loss of people driving. It will not mean making a stand against oil producers though; it will mean a loss of business.

Huhn is the owner of Snappy Tomato Pizza in Dry Ridge. As one of only two pizza delivery businesses in the county, Huhn does 70 percent of her business through delivery.

Gas prices have become an issue for her corporate chain because they are the only pizza company that does not charge for delivery.

"There are several owners, besides myself, who have asked corporate to allow us to charge for delivery," Huhn said. "I think gas prices will eventually effect us."

Huhn employs five drivers who use their own cars to deliver pizzas. They purchase their own gas and receive commission from their sales.

Huhn is concerned that commission will not cover the cost of gas much longer.

"What's gonna happen is we're goanna lose delivery guys," Huhn said. "I can't blame them."

She is also concerned that the rising gas prices will force her to decrease their delivery area.

Huhn is like all other concerned citizens in that she doesn't know of a solution for the problem.

"We can't change our lifestyles," Huhn said. "What are we suppose to do, leave the suburbs and move to the city where we can walk to work?

"I'm hoping this situation gets straightened out as soon as possible."


3 Comments:

At 7:09 PM, August 18, 2005, Blogger BROMEO said...

"I think it is ridiculous," Sparks said of the ever-increasing gas prices nationwide.

"We've all got to get to work, and the gas companies know that."

Sparks pays $65 to fill his pick-up truck and says the cost of gas has limited his once monthly trips to visit his father in Georgia.


I know high gas prices suck but this moron isn't exactly helping his situation there. If he drove a regular 4-cylinder car he probably wouldn't have such an issue. I notice a lot of people driving gas-guzzling SUV's and trucks to work, who have no practical need for them, are complaining the most but won't change their ride or habits to mitigate the hit on the pocketbook...

 
At 2:30 PM, August 22, 2005, Anonymous Anonymous said...

Someone needs to make a bunch of bumper stickers, "Support Al Qaeda. Buy more gas to help finance terrorism" and find good places to put them

 
At 2:30 PM, August 22, 2005, Anonymous Anonymous said...

Someone needs to make a bunch of bumper stickers, "Support Al Qaeda. Buy more gas to help finance terrorism" and find good places to put them

 

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