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$3 gas on the way; Fuel becoming a bit more economical, say experts

Prices at the pump are just over $3 now. It’s plausible those prices could drop below $3, according to experts. Prices at the pump are just over $3 now. It’s plausible those prices could drop below $3, according to experts. Tribune photo by Toby Bonner

A gallon of unleaded regular gas is cheaper than it’s been in years. Although Wyoming is higher than some states, the price will likely match the national level in a month or two, according to local convenience store owners.

As of Monday, the national average price for regular unleaded gasoline was $2.96 per gallon. That’s the lowest since Dec. 27, 2010.

Prices have been dropping in recent days. That is 33 cents less than one year ago, said Lynn Solomon, Mountain West AAA spokesperson in Helena, Mont.

The national average dropped for 39 consecutive days, including Monday. for a total of 38 cents per gallon, Solomon said. Still, gas is relatively pricey in the mountain West.

Right now Wyoming has the seventh-highest gas prices in the nation, Solomon said. The average price statewide as of Monday was 3.21. A review of Powell gas prices Monday afternoon showed all but one store was selling gas from $3.07 to $3.09 per gallon.

Wyoming gas is a bit pricier than elsewhere, but it will decrease. It just takes longer to catch up with the mean price nationally, according to an employee of GasBuddy.com, a website that tracks fuel prices.

“Prices just move slower in Wyoming, the entire Rockies,” said Patrick DeHaan, GasBuddy.com senior petroleum analyst.

Wyoming is a smaller market, so it is slower to respond to market trends, Solomon said. In a month or two, Wyoming’s average will drop below the nation’s, DeHaan said.

Year to date (Jan. 1 to Oct. 30), the national average was $3.47 — 5 cents more than Wyoming’s $3.42 year-to-date average. The 2013 national average was $3.49, once again higher than Wyoming’s $3.37, DeHaan said.

Profits are minimal in the gasoline retail business, according Mike Bailey, the owner of Bailey Oil Company in Riverton, which owns the Pit Stop stores in Powell and Riverton.

Bailey Oil delivers fuel to farms, ranches and construction sites in the Riverton area. Bailey employs a semi and driver to deliver fuel to Powell’s two Pit Stops from Billings or Laurel, Mont. refineries, or if it’s cheaper, from Casper.

Gas stations/convenience stores are making money on gasoline sales, DeHaan said. Big gas stations average 15 cents per gallon profit annually, but smaller outfits earn 5 to 10 cents, he said.

That 15 cents is an annual average. Sometimes gas stations are taking in more, sometimes less.

When the price of gasoline drops, they make more. When the price increases they make less, DeHaan said.

When the price decreases, stations delay dropping the price at the pump. “They pass the decrease slower than they have to,” DeHaan said.

However, when the price escalates, those stations can’t raise their pump prices fast enough to keep up with the increase they’re paying, DeHaan said.

Retail fuel sales are highly competitive. There are at least six gas retailers in Powell. All charge about the same price.

“That’s where competition helps the consumer,” Bailey said.

Gas is higher in Cody than Powell. On Monday, GasBuddy listed nine stations in Cody selling gas from $3.22 to $3.35.

Powell may be a little more competitive than Cody. Cody retailers may charge more because they make most of their profit in the summer tourist season, Bailey said.

Because Cody is closer to Yellowstone National Park, businesses believe they can charge more for gas. Retailers near the park typically charge more, DeHaan said.

There could be a trickle-down effect at the pump if declining crude costs continue.

“If it goes down any more, we might see $3 gas,” Bailey said.

A barrel could drop to $65 to $75. It looks more likely that gas could drop to less than $3. If $3.01 is the national average now, less than $3 looks likely here, DeHaan said.

If crude goes down, pump prices will too, but Bailey said he can’t predict what people will pay at the pump.

“We really don’t know,” he said.

At this time Saudi Arabia, Iran and Iraq wield the most influence in oil prices. Even ISIS — the Islamic State of Iraq and Syria — is selling oil. And the increase in domestic oil production is helping to keep the price down, DeHaan said.

“Gas prices typically decline this time of year, but have fallen more swiftly than typical due to the sharply declining price of crude oil,” Michael Green, AAA public relations manager, stated in an Oct. 27 AAA article. “The cost of crude oil accounts for approximately two-thirds of the price consumers pay for gasoline, which means, barring any other factors, gas prices continue to fall as long as crude oil prices decline.”

For a gallon of gas in 2013, consumers paid 9 percent for distribution and marketing, 11 percent for refining costs and profits, 12 percent for federal and state taxes and 68 percent for crude oil, according to the U.S. Energy Information Administration.

It may be a little premature to forecast modes of travel or spending over the holidays, but it can’t hurt to ask.

“Generally, it’s still too early to predict what travelers may do for Thanksgiving,” Solomon said responding to the above question. “That said, this year’s significantly lower gas prices may give some travelers more incentive to drive rather than deal with airline travel.”

With gas costing less than last year, people may use those savings for holiday gifts or dining, Solomon said.

Workers, drivers offer views in pump-side perspective

The price of gas has dropped a bit recently, but it still isn’t dirt cheap. Last week people expressed their opinions on both sides of the pump.

When Bau Johnson, who works at Pit Stop No. 11 on East Coulter Avenue, changes the price of fuel on the sign, people ask about the cost.

“They tend to groan a little more when I said the price is going up,” Johnson said. “People were ecstatic when it dropped by 20 cents.”

The price of gasoline is out of their hands. “There is really nothing Bau and I can do about it,”  said Johnson’s coworker, Jake Mathis.

“It’s just how it is,” Johnson said.

A few customers carp.

“Some of them have bad days,” Jake Mathis said. “You can’t take it to heart, really.”

Some people gripe, said Kathy Shultz, who works at Blair’s Market gas station on West Coulter Avenue.

“I know people think prices are high, but they should look at 2008 or 2009,” Shultz said.

In 2008 gas reached a high of $4.10 per gallon of regular, according to GasBuddy.Com.

“I’ve got a few (complaints),” said Elizabeth Mathis, who works at Pit Stop No. 12 on West Coulter Avenue.

“I think they’ve come to accept where the gas prices are,” said Todd Thayer at Pit Stop No. 12.

Customers come and go. Some get gas, others grab a newspaper or pop. Some stop to chat for a minute with the store clerks as though they are next-door neighbors.

“I think a lot of people understand we don’t really have anything to do with (the price),” Elizabeth Mathis said.

People shared their thoughts during an informal pump poll.

“I do think it’s high,” said Ginger Langdon of Powell, squeezing the pump handle to round her fuel purchase up to the next dollar.

“It’s higher here than Casper,” Langdon said.

Casper was running $3.17 to $3.21 per gallon that day, according to GasBuddy.com, while Powell’s pump prices ranged from $3.33 to $3.37.

Fuel is cheaper in the United States than Europe, said Bryce Jennings of Fairbanks, Alaska.
It is $4.53 per gallon in Alaska, said Jennings, who drives a hybrid.

“I don’t think everybody needs trucks or SUVs,” he said.

Fewer people are driving gas guzzlers these days, but the type of automobile a person owns is up to them, said Mike Bailey, owner of Bailey Oil Company in Riverton, which also owns the two Pit Stops in Powell.

“You’ve got to leave that decision with consumers,” Bailey said.

Jennings has worked for an oil company, so he is not opposed to the industry.

“They treated me really well,” he said. “They paid me really well. If we’re mad at it we should change the system, not be mad at the oil companies.”

If people don’t like the price of gas, they can stop buying it, Jennings said.

— Gib Mathers

2 comments

  • posted by WyomingGal

    November 05, 2014 11:20 am

    Has anyone besides me ever noticed that they always drop the gas prices right before the holiday season so that we can go shopping for more stuff we don't need? Watch for, and expect, those gas prices to steadily climb after the first of the year. It's a scam. Always has been, always will be.

  • posted by Disgusted taxpayer

    November 04, 2014 3:51 pm

    One word describes fuel prices...GREED.I find it interesating why gas prices in Montana and Wyoming are higher,and have been for awhiloe,than other surrounding states.Yete people go on buying gas hog trucks and SUV's.

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