FOR IMMEDIATE RELEASE: April 28, 1999
Contact: Will L. Woods, CAE (949) 660-0907
Gas prices skyrocket but public shouldn’t blame independent dealers
In the past two months, we have seen gas prices climb to unprecedented, and unwarranted, highs of $1.62+ per gallon for regular unleaded (RUL) fuel (average statewide price per California Energy Commission report 4/12/99). Today, in many areas of the state, the price for RUL gas approaches, and in many areas exceeds, $1.65 per gallon.
Independent Service Station Dealers are taking the brunt of the ire directed towards the oil industry by consumers. Unfortunately, dealers don’t control the cost of gas delivered to them by the oil companies. When consumers cut back on gas usage, dealer profits drop as well. They must pass on increased costs just to stay in business. Station owners don’t like high gas prices, either. They actually lose income due to reduced sales volumes, pay more in credit card fees, not to mention the consumer "ill-will" created by the oil companies.
"In 1996, the public was outraged and pressing for legislative action when the price per gallon went over $1.40," says Will L. Woods, CAE, Executive Director of Automotive Trade Organizations of California (AuTO-CA), the largest trade association representing California service station dealers. "But this year, there's been only minor concerns as the oil companies have jumped prices in 5, 6, 8 and even 10 cent increments, resulting in ill feelings towards dealers. It looks like the oil companies have done it again ... they've conditioned the public to accept higher prices and caused the blame to be levied against ‘the messenger’."
AuTO-CA and other industry experts have long been looking at the consolidation of the west coast motor fuel marketplace as a serious threat to competitive pricing. The recent Tosco purchase of Unocal assets, ARCO's takeover of Thrifty Oil stations, the merger of
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Shell and Texaco and the pending mergers of Exxon and Mobil, and BP Amoco and ARCO will further reduce competition, and prices no doubt will climb. California could be looking at prices even higher than this spring, for extended periods of time.
"Even if the prices "lower" to the $1.30-$1.40 per gallon range, we will still be paying more for gas than we should. Unless we take control away from them and return it to consumers, we're in for more 'conditioning' and even higher prices," says Woods.