Erie Times-News (Pennsylvania)
Discontent at local gas pumps dropped a little this week — about 4 to 6 cents’ worth.
Drivers watched pump prices slide downward by that much a gallon at many stations in the Erie region over the past few days, and hoped they would drop further.
And if world oil prices are any indication, they should get their wish — at least for a while.
Late January and early February are typically the times when gas prices start to creep up, but oil prices on the New York Mercantile Exchange on Thursday briefly fell below $50 a barrel — something they have not done since May 2005 — before settling at $50.48 for a 42-gallon barrel.
The Associated Press reported that closing price represents a 17 percent drop in oil futures since the end of 2006, and analysts believe crude prices could fall further.
But local gas prices have not matched that decline in oil prices, and a quick drive west into Ohio is all it takes to see that prices in the Erie region have not kept pace with price drops elsewhere.
“Prices seem to be going down slower here than in other parts of the country,” said David Poor, the Erie-based regional president for the East Central AAA. “Gas prices seem to be real slow coming down.”
And the auto club’s figures bear that out. While the AP says world oil prices have fallen 17 percent from the end of 2006, the AAA figures show average gas prices in the Erie region have dropped about 5 percent — from $2.406 a gallon at the end of 2006 to $2.286 a gallon Thursday.
But prices in Ohio averaged $2.029 a gallon Thursday, AAA said, and the federal Energy Information Administration reported gas was selling for less than $2 a gallon in many areas of the Midwest.
Drivers in the Erie region could easily see similar variances on a local scale.
Gas in Erie was going for as low as $2.23 a gallon Thursday afternoon, but gas in Edinboro and Meadville was ringing up at $2.29 a gallon, and stations in the Oil City and Titusville areas were charging $2.35 a gallon.
“That bothers me,” said Tina Oblinski, a nurse from Union City who was filling her car up on $2.29-a-gallon gas at an Edinboro-area Country Fair.
“I don’t understand it. Why would it be so much cheaper one place than another? It’s much cheaper in Waterford than it is here. It used to be cheaper here when stations here started to compete with each other,” Oblinski said. “Now it is cheaper in Waterford.”
Drivers headed west into Ohio found statewide gas prices were averaging about 28 cents a gallon less than those in the Erie region.
“It doesn’t make sense,” said Tianna Waggoner, an Edinboro University of Pennsylvania student from Erie, as she pumped $23.30 worth of gas into her Nissan Sentra at the Country Fair. “Cleveland, Ohio, has a cost of living much higher than Erie, but gas prices there are lower. It doesn’t make sense.”
Of course there are places with higher gas prices. Drivers headed into New York on Thursday found prices averaged about 15.6 cents a gallon higher than those in the Erie region.
The reasons that experts give are many and complex.
They point to differences in state gas taxes, but also say factors include distance from suppliers, the number of refineries and terminals that serve an area, environmental regulations, competition among wholesalers and suppliers, an area’s distance from supplies of oil and local competition among stations.
Jeff Lenard, spokesman for the Virginia-based National Association of Convenience Stores, said retail gas stations are in much the same boat as drivers. They feel the pain when gas prices spike.
Lenard said the typical pretax profit for a gas station is 2 to 3 cents a gallon. “The credit card company typically makes more on a sale than the retailer does,” he said.
When prices go up, already razor-thin margins shrink as stations try to stay competitive. When oil prices drop, gas-price declines sometime lag as retailers try to recoup some of those losses.
Judy Dugan, research director for the California-based consumer group Foundation of Taxpayer and Consumer Rights, agrees that retail gas stations are not the problem. “There is still a competitive situation at the retail level.”
Rather, Dugan blames an industry with so few refiners, suppliers and wholesalers left that there is “very minimal” competition. “How many refineries are refining gas for your region? Probably remarkably few,” she said.
Steve Kovachik, a chemical engineer who used to live in Waterford but now calls Pittsburgh home, said he understands the economics behind the $2.49-a-gallon high-test gas he pumped into his Nissan Maxima at an Edinboro-area Sheetz.
“It’s a seller’s market,” Kovachik said. “All you can do is try to find the best deal you can.”
