THE TOUGH CUSTOMER- Gas fuming: Why a gallon costs less in Richmond than here
Is there anyone who watched the price of gasoline jump this past summer from a few bucks a gallon to, in some places, nearly five dollars per gallon, and didn't think to themselves that we're all getting taken for a ride?
As for by whom, well, take your pick: OPEC, greedy oil companies, Wall Street speculators, everyone in the Bush/Cheney Administration, or just the gas station owner taking advantage of the situation to gouge the public.
Mary Atkinson sure has. Atkinson is an artist and painter who has lived in Charlottesville for about 13 years. Atkinson raised her three daughters in Richmond, and one still lives there with several children of her own. So Atkinson is back and forth quite a bit to visit her grandkids.
That is how she came to notice over the last several weeks that gasoline seems to cost a lot more here in Charlottesville– at times at least 50 cents per gallon more, by her reckoning– than it does in Richmond.
That convinced Atkinson that price manipulation was happening. Atkinson is originally from Brooklyn, New York, and while living in the Old Dominion for many years may have faded her accent and her call-it-as-she-sees-it attitude, it hasn't eliminated it.
"It's baloney," she says. "I was upset."
The price difference when I checked last Friday was not as substantial as Atkinson says she noticed a few weeks ago, but it was significant. For example, according to the website VirginiaGasPrices.com, a gallon of regular could be had at an Exxon station located in Richmond for $1.93. The cheapest station in Charlottesville, a Texaco, sold a gallon for $2.19, and the cheapest Exxon gasoline was $2.32.
Mark Finley, who owns a service station in town, is puzzled by the discrepancy as well.
"I can't explain it either," he said, although he noted that Richmond is a supply point where tankers pick up gasoline from a pipeline, and there were likely additional transportation costs associated with getting gasoline to Charlottesville.
One Hook reader notes that, with a typical tanker truck carrying 9,000 gallons and with Charlottesville gas going for 25 cents more per gallon, it appears that each truck is earning $2,250 for a one-hour drive. When gas is 50 cents more, it looks like a $4,500 profit per truck.
Nice work if you can get, but Charlottesville's top retailer says there's nothing fishy going on. Transportation is only part of the explanation, according to David Sutton, president of gasoline distributor Tiger Fuel. He says transportation adds only about a nickel per gallon.
The main reason for the price difference, Sutton explains, is slower inventory turnover in Charlottesville as compared to a more crowded urban area like Richmond.
The wholesale price of fuel changes at least once, sometimes twice per day, according to Sutton. When a station owner buys, say at $2 per gallon, that price will be the biggest factor in determining the retail price he must charge to eke out a profit.
When the wholesale price of gasoline rises and falls, therefore, those changes may not be reflected in a particular station's retail price immediately. In more populated places like Richmond, Sutton says, there is faster turnover of gasoline at the stations, so prices more closely reflect the current wholesale price.
As a result, Sutton says, when wholesale prices are dropping, then retail prices will fall faster, which is what Charlottesville consumer Atkinson has been noticing in this autumn of falling prices. (On the other hand, Sutton notes, when wholesale prices are climbing, they will rise faster in a quick inventory turnover area like Richmond.)
Sutton attributes the fact that we don't fully appreciate this current benefit of living in Charlottesville to the "consumer's short term memory." As for the price of gasoline generally, Sutton says it's still dropping, so the differential between here and Richmond is likely to continue.
Sutton's explanation made sense to Atkinson, who explains part of the reason for her initial question was, "I want to understand the whole world before I die."
Atkinson says she waits until she makes a trip to Richmond to fill her tank. That strategy may continue to save her money for at least a little while longer.
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