Dec. 01–Call it an outrage.
Call it a mystery.
Call it an unnatural distortion of the rules of capitalism.
Call it whatever you like, but the current variation between fuel prices in north central Idaho is the largest for any region in the state.
Oddly, it’s the small-town residents and visitors who are getting the better end of this deal. According to gasbuddy.com, a website that tracks prices at thousands of stations nationwide, the cheapest gas in all of Idaho right now can be found at the Conoco station in Kamiah — $2.51 per gallon, as of Thursday (see sidebar, Page 3A).
The Conoco and Exxon stations in Orofino aren’t far behind. According to gasbuddy.com, they have the third-lowest prices in the state, at $2.65 per gallon.
Meanwhile, just down the road in Lewiston, drivers are paying an average of $3.15 per gallon. That’s the highest average price for any county in Idaho, according to the website.
So how is it possible that Idaho’s highest and lowest fuel prices are located just 65 miles apart? Without knowing more about the exact market forces at play, experts say they can’t answer that. It could be a short-term anomaly, or it may have something to do with the local competitive environment.
“It gets very fact-specific very quickly,” said Brett DeLange, chief of the Consumer Protection Division in Idaho’sOffice of the Attorney General.
The Consumer Protection Division tracks retail and wholesale fuel margins on a monthly basis. As of October, average retail prices across the state essentially were equal to the wholesale price — meaning retailers weren’t making much profit on their fuel sales. And that’s been the situation throughout much of the year.
“We just aren’t seeing wide margins between retail and wholesale prices,” DeLange said.
The division doesn’t monitor smaller-market regions, though, so things may be different in Lewiston.
The National Association of Convenience Stores notes that taxes, fuel blends and wholesale costs typically are the main factors in determining local gas prices. Wholesale costs, in turn, are influenced by how much volume a particular retailer goes through in a year, as well as whether it’s a branded gasoline, the amount of local competition and what it costs to do business in the area.
Seattle, for example, may be the biggest fuel market in the Pacific Northwest, but exorbitant real estate costs also make it one of the most expensive. Consequently, average gas prices there are about $3.69 per gallon right now — compared to a statewide average of $3.31 and $3.02 in the Spokane market, according to gasbuddy.com.
Suzie Budge, a Boise lobbyist representing the Idaho Petroleum Marketers and Convenience Stores Association, said wholesale costs may not even factor into the price at the pump, at least on a short-term basis.
“It is definitely the case in this business that people make decisions based on local market circumstances,” she said. “They don’t dare raise their prices too much above the competition, or (customers) will drive down the street. Most prices are based on what the competition is doing.”
That appears to be the case in Orofino. Jeff Wicks, the area manager for Sunset Marts, which manages the Orofino Conoco store, said he doesn’t even know how much the company pays for fuel.
“I just follow the market in our area,” he said. “I look at the street price (at competing stations) and follow that price. That’s what the owner wants me to do.”
DeLange said there’s nothing illegal about that, so long as competitors don’t communicate their intentions in advance.
“If I call you up and say: ‘Why don’t you raise your price to $2.95 today and I’ll follow you tomorrow?’ — that’s price fixing and it’s illegal,” he said. “But as long as there’s no agreement up front, there’s nothing illegal about matching your competitor’s price. That happens in a number of industries, particularly where prices are fairly public.”
Unusual factors also can come into play. Nationally, for example, average retail fuel prices have dropped nearly 50 cents per gallon since Oct. 2, when reporter Jamal Khashoggi was killed at the Saudi Arabian consulate in Istanbul. A Nov. 26 blog post on gasbuddy.com suggested the two issues were closely linked.
“The Trump administration’s reluctance to punish Saudi Arabia for its role in the murder of Jamal Khashoggi is likely leading Saudi Arabia to push against large cuts in crude oil production, fearing potential fallout from (President Donald) Trump,” the post said. “In the week ahead, motorists in most states will likely see further drops, saving the country $125 million per day versus prices in early October.”
OPEC, the Organization of Petroleum Exporting Countries, will meet in Vienna on Friday to discuss potential cuts in crude oil production.
Spence may be contacted at bspence@lmtribune.com or (208) 791-9168.
Fuel price breakdown
Fuel prices in north central Idaho and southeastern Washington vary by nearly $1 per gallon, from $2.51 in Kamiah to $3.49 per gallon at one station in Pullman.
The lowest prices in communities across the region, according to gasbuddy.com, are:
Clarkston: Costco, 301 Fifth St., $2.99 per gallon
Deary: Exxon, 700 Second Ave., $2.79
Grangeville: Cenex, 1001 N. Idaho Ave., $3.02
Kamiah: Conoco, 801 Third St., $2.51
Lewiston: Cenex, 1200 Snake River Ave., $3.09; the cash price at the Conoco station near the Clearwater River Casino was $2.70
Moscow: Several stations were charging $3.09
Orofino: Conoco, 125 Michigan Ave., and Exxon, 13834 U.S. 12, $2.65
Pullman: Mobil station, 770 N. Grand Ave., $3.35
Idaho state average: $2.91
Washington state average: $3.31; this is the third-highest state average in the United States, after Hawaii and California
U.S. average: $2.47; this is the lowest level since last December
Note: The federal fuel tax is 18.4 cents per gallon. Idaho adds another 33 cents in taxes, for a total tax of 51.4 cents per gallon; Washington adds another 49.4 cents, for a total of 67.8 cents per gallon. According to the American Petroleum Institute, the U.S. average is 52.6 cents per gallon.
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(c)2018 the Lewiston Tribune (Lewiston, Idaho)
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