Gasoline prices refuse to fall in Atmore
Published 6:55 am Sunday, August 6, 2000
By By Michael S. Hill
Advance Staff Writer
Probably every person in this country who operates a vehicle with a motor is aware of escalating gas prices. According to the Weekly Retail Gasoline Prices report, the average price of a gallon of 87 grade gasoline in the United States rose 36 cents from the first week of January 2000 to peak at $1.63 on June 12.
And probably everybody has also noticed the dip in prices in recent weeks. According to the same report mentioned above, the average price has fallen back to $1.47 as of July 31.
But here in Atmore, the price of gasoline has remained fairly steady. The average price for the major gasoline brands, such as Amoco and Phillips 66, is about $1.56 with a high of $1.61 at the Amoco station on 2nd Avenue. That station is owned by Diamond Gasoline Station, Inc.
Roy White, vice president for Diamond, says the current gas prices are not overpriced.
Bart Fletcher is the head of the Alabama Oilmen's Association and the Alabama Association of Convenience Stores, and he said most people don't know what factors are involved in setting gasoline prices.
Fletcher said some of the main factors influencing gas prices are wholesale prices, contractual obligations, transportation costs, number of stores and employees, the type and age of facilities, competition and the state and city taxes.
Here's a synopsis of how gasoline is priced from the wholesalers: First, there is a flat federal tax applied to all state-bought gasoline, followed by a state tax. State tax in Alabama is 37 cents per gallon. Twenty-five counties in Alabama further tax the gasoline, while 315 Alabama cities, including Atmore, apply a city tax in lieu of a county tax. Atmore tax is 2 cents per gallon. These taxes are included in the advertised price of gas. Jobbers purchase the gasoline from the refineries at wholesale prices and transport it to the station owners, or retailers. Most jobbers are also retailers, but if that isn't the case, then the jobbers add their profit margin to the price of the gas before selling it to retailers. Finally, the retailers add their profit margin to the gas price.
Jobbers, like White, have no control over the wholesale prices and are not allowed to shop around for the lowest price. This is because a jobber typically signs a contract with an oil company that binds him to purchase only the oil company's gasoline. In return, the jobber, who usually owns one or more service stations, is afforded the oil company's name, such as Shell, Amoco or Texaco, and all of the advertising that accompanies that organization.
The only variable in the pricing of gasoline left to retailer control is their individual profit margins. So the question remains: why, when gas prices are falling nearby, have gas prices remained constant here in Atmore?
It seems that those in the business understand the dilemma faced by Atmore's jobbers. Doug Vickrey, owner of Doug's Grocery, sells 87 grade gasoline for $1.45 per gallon.
Fletcher says area competition is a main factor in determining gas prices.
Fletcher and White both agree that gas prices are nearly impossible to predict.