Dear Ace: Gas is so expensive in the city! I was traveling in the Valley, and people were paying 20 to 30 cents less at the pump there than in Charlottesville. I doubt very much that it costs less to transport gas over the mountains. What gives? —Ronny Gong Fewms
Dear Ronny: It’s not often that Ace gets more than one person asking him about any particular topic. On the question of this fair city’s relatively higher gas prices, however, Ace has been deluged with calls, e-mails and faxes from throughout Central Virginia over the past few weeks. People clearly care about the high cost of gasoline.
This fact was also reflected in a September 12 broadcast by NBC 29, a September 13 article in The Daily Progress, and a flurry of local blogging about what we pay at the pump. And, though Ace’s weekly writing schedule precludes him from pinpointing the price of gas as you read this, he can surely tell you more than a few things about it.
The average price of gas nationwide has indeed been dropping by as much as 10 cents a gallon per week since late August. So why, exactly, have Charlottesville stations been so slow to catch up? Well, consider this, Ronny: The Department of Energy’s Energy Information Administration reports that in 2002, refining costs and profits for the major fuel companies made up 13 percent of the price of gasoline. That number has since doubled, with refining and profit-making now comprising 26 percent of the price of gas. Consequentially, the percentage of what you pay that actually goes to retailers (i.e., gas stations) has been cut in half—from 13 percent in 2002 to just 6 percent as of July 2006.
In short, the big companies are making more and the little guys are making less. Ace hardly has to remind you that ExxonMobil, for example, posted a record-smashing $36 billion in profit at the end of 2005.
With that, we return to our original question: Are Charlottesville’s higher gas prices the stopgap measures of beleaguered gas station owners suffering under an unfair corporate structure? Or are they simply the result of greed and malice aforethought under the protection of “what the market can bear”?
Ace is no economist, Ronny, but his best guess is, it’s probably a little of both. Gas station owners are trying to protect their shrinking slice of the gas-price pie, and Charlottesville—with its large number of vehicles and relatively elevated standard of living—provides them a better opportunity to pad their profits than outlying areas. Ace, in the meantime, is pinching his pennies and walking. If only good bourbon whiskey cost a few bucks a gallon!