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SIERRA VISTA — Drivers usually get a break from high gas prices in the fall, but for the fifth straight week gasoline prices continue to climb.
Consumers often blame gas stations or a gas supplier conspiracy for raising prices without reason, but there’s more to the climbing cost of fuel than the increasing numbers at the pump.
Last week Arizona drivers were paying an average of $2.686 for a gallon of regular unleaded gasoline, according to AAA Arizona. Almost a penny increase from the week before and about 34 cents more than this time last year.
The September jump was largely due to climbing oil price — one of the many factors that affect gas prices, said Michelle Donati, a public affairs specialist for AAA Arizona.
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Since oil prices have been reaching record highs and trading for just under $80 a barrel, the cost to customers is being felt right now.
Like any business, supply and demand is always affecting gas prices, Donati said. In the summer, when more people around the country are traveling, the demand goes up and so does the price, she said.
But prices normally drop from late summer to fall.
Last year gas prices steadily dropped in Sierra Vista from about $2.85 in August to $2.10 in November, the lowest price all year.
The reduced cost in the fall and winter is also the result of cheaper “winter blends” of gasoline. Winter blends are more polluting and held to lesser emissions standards than the state-mandated summer blends that include ethanol.
Speculation of what will happen to the oil market — whether hurricanes will affect refinery production, for example — also affects price.
When suppliers predict disruptions to the supply of gasoline, including hurricanes that could threaten refinery production, they start to increase gas prices, said Robert Carreira, director of the Cochise College Center for Economic Research.
“They want to spread that increased cost over a greater period,” he said, rather than waiting and doubling gas prices, for example, if gasoline production is reduced.
The distance and means of gas distribution throughout the state is also a reason for regional price differences in Arizona and across the country, Donati said. The closer a station is to a refinery the cheaper the gas is, usually.
Many corporate-owned gas station prices are also set at the corporate level, not station managers, she said. Stations that sell more products, other than gasoline, are more likely to offer cheaper gas prices than stations that rely on gas sales, she said.
Although Jimmy Harlan, owner of Sierra Service Center, can set the price he wants for the fuel he sells as an independent station, he usually keeps his prices in line with the cheapest in town to stay competitive.
“Sometimes you can’t because the cost of fuel won’t allow it,” Harlan said.
If a customer buys a candy bar and some gas he’ll make more profit on the candy bar usually, he said.
The station, located at 296 E. Fry Blvd., is the only independent gas station in Sierra Vista, but Harlan usually feels forced to match the lowest gas price in the city to stay competitive, he said. He also feels the pressure to raise prices when refineries are operating below capacity and oil is sought by gas suppliers with more buying power.
The competition, the cost of fuel and the cost of “doing business,” including maintenance, employee salaries and credit transaction fees, are all a part of the pricing structure for Gas City, said Roxanne Braun, administrative assistant for Gas City corporate offices in Illinois.
And as for conspiracies among gas or oil suppliers to raise or reduce prices, it’s unlikely. Isn’t likely because there is nothing that would stop another gas company from offering a cheaper price, said Robert Carreira, director of the Cochise College Center for Economic Research.
Some area consumers may feel they pay more than Tucson residents at the pump, but that isn’t always true, Carreira said.
Since January 2006 county level prices have generally followed state and national trends, sometimes landing slightly above or below state and nationwide averages, he said.
Gas prices in Sierra Vista have been slightly below the countywide average, but prices at the city and county level have tracked close to one another.
It’s difficult to say when or if gas prices will start falling, but it’s likely as hurricane season wanes, Donati said.
Herald/Review reporter Laura Ory can be reached at 515-4683 or by e-mail at laura.ory@svherald.com.
Darren wrote on Oct 8, 2007 11:03 AM: