Gas price questions continue
December 16, 2005
FRISCO ” Experts didn’t give an adequate answer to the question of why gas is about 40 cents more in Summit County than in Denver, and that fueled anger in some locals Thursday night.
About 70 people turned out at the Summit County Community and Senior Center to listen to five panelists talk about the price differential between ski towns and the big city. Our Future Summit sponsored the event, after Attorney General John Suthers denied State Rep. Gary Lindstrom’s request to investigate alleged price gouging.
Panelists included: Lindstrom; Dennis Creamer, a manager of Suncor USA/Phillips 66; Stan Dempsey, Jr., president of Colorado Petroleum Association; Randy Udall, executive director of the Community Office for Resource Efficiency; and Silverthorne resident Tim Theis, who organized a successful campaign to lower gas prices locally in the 1990s.
The discussion strayed from the main question: Why are we paying 40 cents more than Denver, and even 25 cents more than Georgetown. And that irritated a few folks. While the two-hour meeting informed people about larger gas and oil issues, by the end, Lindstrom summed up many people’s frustration:
“I came here and listened, and it was not good for me. I didn’t get my question answered,” Lindstrom said. “I personally think this was a major waste of time. We still don’t know why gas prices didn’t go down (from Denver’s prices) and why gas prices are all the same.”
Dempsey cited transportation costs, higher land prices in Summit County, higher wages and less competition as reasons why gas is more expensive in Summit than in Denver.
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“If demand is strong, you are going to set a higher price,” Dempsey said, also suggesting that people in Summit County drove more than Denverites “an allegation that made audience members shake their heads and cry out in protest.
“It’s pure profit,” said Heeney resident Ann Marie Damian. “That’s the only explanation we have right now. It’s pure profit.”
In the end, Dempsey said a person can’t compare gas prices in Denver to Summit because the regions have different markets. Those answers didn’t satisfy such people as Theis, who has lived in Summit County for 30 years and thinks prices should be only about 6 cents to 8 cents more than Denver.
Theis encouraged people to picket and boycott one selected station, if an owner does not agree to lower prices in exchange for local support.
“You can stop this foolishness, believe me,” Theis said. “All it takes is your willingness to stand out in the cold with a sign.”
But that would ruin Paul and Holly Klein, who independently own the Sinclair station in Wildernest. They say they’ve made a 3.7 percent gross profit so far this year, and lowering gas prices would lower that margin. Plus, they fear locals would be fickle, buying gas from them while it was cheap but then moving on to the next service station that was cheap and convenient. Danny Eilts, an independent co-owner of Lake Dillon and Frisco Conocos, faces a similar challenge with larger corporations.
“I guarantee that if I lower my price 5 cents, 7-Eleven will go 5 below me. They don’t care if they lose money (because they have stations in other regions making money), but I care if I lose money.”
Another problem comes from corporate stations in Denver selling gas at or below cost. Though it’s illegal in Colorado to sell gas below cost, Lindstrom said that oil company employees and haulers told him the average price stations are paying for gas is $2 a gallon, and such chains as Costco and grocery stores are taking losses on gas to draw people into their stores.
Eilts briefly listed eight reasons why prices are higher in the mountains, but only a few people who stopped to talk to him after the meeting got more details, including price comparisons.
He said last year he made a 12 percent gross profit, but so far this year, he’s only made a 6 percent gross profit. He and the Kleins admit they’re making better profits now than they did in the summer ” the Kleins are seeing a 12 percent profit return right now ” but they say they need to make up for a summer of high gas costs and a slow fall. Klein hopes the current 12 percent return will boost her annual gross profit to 4 percent, she said.
“There aren’t the margins in gas that people think there are,” she said. “I don’t know of any retail store that would operate on a 12 percent (or less) gross profit.”
Eilts said labor costs ($2.50 to $5 more than Denver); land ($8 more per square foot); taxes ($67 more per square foot); transportation (4 cents more); building costs (20 percent to 25 percent higher); heating costs (nearly double); snow removal (nearly 400 percent more); and a 5 percent loss of total gas volume because of contraction caused by cooler temperatures makes gas more expensive in the mountains. His figures are averages from an informal survey done this month.
Kimberly Nicoletti can be reached at (970) 668-3998, ext. 13624, or at firstname.lastname@example.org.
The typical family in the U.S. uses 1,000 gallons per year.
In the 1950s, the whole world used 10 million barrels of oil a day, and the U.S. produced two-thirds of it.
50 years later, the world uses 84 million barrels a day, and the U.S. alone uses twice as much as the world was using in the 1950s.
” Source: Randy Udall, executive director of the Community Office for Resource Efficiency