Why big range in gasoline prices?

July 01, 2008|By DAN THANH DANG

T he Q: At the Exxon on Honeygo Boulevard in White Marsh, regular unleaded gasoline was running $4.17 a gallon at the end of last week. Not too far away at Ebenezer Road and Pulaski Highway, the Texaco was selling it at $3.99 a gallon while Sunoco priced its gas at $3.94 a gallon and Shell was selling the same for $3.96 a gallon.

Reader Bill Dunbar called with a twinge of vexation in his voice about those wildly varying prices.

"One White Marsh gas station is always 10 cents to 20 cents higher than other stations," Dunbar said. "Why won't the attorney general look into price gouging by some gas stations? I can't understand why the Attorney General doesn't look into that. It just seems like a bunch of smoke and mirrors to me."

The high price of gasoline is a bit hard to swallow these days, and it has helped fuel theories about speculators causing gas prices to rise and concerns about plain old price gouging.

Dunbar didn't directly ask, but here's what you're paying for when you purchase a gallon of gas:

About 10 percent of the price is made up of federal, state and local taxes. The federal gasoline tax is 18.4 cents per gallon and the average state tax is 21.4 cents per gallon, according to the Energy Information Administration. Maryland charges 23.5 cents.

Sixty-four percent goes to crude oil, which is the average price of a barrel of oil purchased by refiners. Another 21 percent goes to refining costs and profits, which is the difference between the monthly average of the spot price of gas or diesel fuel and the average price of crude purchased by refiners. Finally, 5 percent goes to distribution and marketing costs and profits.

The EIA says that pump prices are often highest in locations with few retail gasoline stations. Even stations located close together may have different traffic patterns, rents, and sources of supply that can influence pricing.

So there is some rhyme and reason to how prices are set, but that doesn't mean shenanigans are impossible.

The Office of the Attorney General says that while it has received some calls regarding high gas prices, "the calls do not involve claims of price gouging by gas stations," said Steve Sakamoto-Wengel, the consumer protection counsel for regulation, legislation and policy.

Surprisingly, Maryland does not have a law against price gouging.

"Efforts by the Attorney General's Office to enact a price gouging statute have been unsuccessful," Sakamoto-Wengel said. "Following Hurricane Katrina, the division did investigate price increases at a number of gas stations and determined that, in some cases, the increase in price could not be justified by the stations' increased costs. However, because Maryland does not have a law against price gouging, the division did not take action against those dealers."

The AG's office has pushed for price gouging legislation during each of the past three sessions, but it has been defeated by intense lobbying from oil companies, gas stations, retailers, chambers of commerce and others.

Last session, House Bill 1487 sponsored by Baltimore Del. Samuel I. Rosenberg would have prohibited a business, during a state of emergency declared by the governor, from selling or offering to sell essential goods or services for more than 20 percent over what it charged four days before the state of emergency.

"There are exceptions, such as where a business can show that its costs have risen by more than 20 percent," Sakamoto-Wengel said, adding that "29 states currently have some type of price gouging legislation."

If you think Maryland ought to have one, too, get on the horn and bend some elected officials' ears.

dan.thanh.dang@baltsun.com

Reach Consuming Interests by e-mail at consuminginterests@ baltsun.com or by phone at 410-332-6151. Find an archive of Consuming Interest columns at baltimoresun.com/consuming. Read the blog at baltimore sun.com/consuminginterests.

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