Retailers pocket less amid gas hike
Published by Florida Times-Union on February 14, 2003.
The average price for gasoline in Florida hit record levels yesterday, but retailers might actually be pocketing less money as the numbers on the pumps tick higher.
Regular unleaded sold at a statewide average of $1.669 a gallon yesterday, a few cents above the Jacksonville average of $1.642 a gallon.
Since Tuesday, stations on the First Coast have flirted with the $2 barrier -- near the airport, super-grade gas has been going for $1.99 since earlier in the week -- while lower grades of fuel continue to get more expensive. Over the past two days, regular grade gas at some stations has gone from $1.79 to $1.85, while plus grade has jumped 2 cents, to $1.91.
Those increases aren't justified and come ''uncomfortably close'' to gouging, AAA spokesman Geoff Sundstrom said yesterday -- a statement that ignited a firestorm of controversy.
Oil companies are reacting to what could happen to crude oil prices if the United States invades Iraq, Sundstrom said. ''We're not saying anyone is particularly price-gouging, but we're saying that in this environment the possibility exists for it to occur,'' he said.
That's a suggestion that didn't sit well with those who sell gasoline.
"Why these ill-informed individuals are allowed to continue to inject themselves into situations they have no knowledge or expertise in is amazing to me," said Jim Smith, president of the Florida Petroleum Marketers and Convenience Store Association.
The price increases are because commodity speculators have bid up the price of crude oil, Smith said, with the possibility of war in Iraq creating "a panic situation that's driving them into a frenzy." The wholesale price of a barrel of light sweet crude was $36.10 yesterday, up from $33.67 on Jan. 31.
Faced with wholesale prices jumping 6 to 8 cents over the course of a day, retailers have actually seen their profit margins squeezed, said Smith and other industry experts.
"The notion that retailers and marketers are gouging is not true," said Tom Kloza, chief oil analyst with the Oil Price Information Service. "Crude oil prices are probably up 35 cents since Thanksgiving Day, and all of that is not being passed along to the street."
That's creating a tough market for gas stations, said one wholesaler who supplies the Jacksonville market. "The retailers are really suffering," said Monty Lewis, president of Plantation Petroleum in Thomasville, Ga. "The average margin on the retail end is probably as poor as it's been in years. They're really hurting."
As well as fears about a war in Iraq, prices have been pushed up by a harsh winter and a strike in Venezuela that has turned the company from an oil exporter to an importer.
Even without those situations being resolved, prices might have peaked, experts said, at least for the moment. When driving season comes around, prices will probably rise once again.
"This round of fluctuations is almost over," Kloza said. "We're going to stabilize. But then, in spring and summer -- watch out. "