LITTLE ROCK, Ark. -- Three weeks after fuel prices began spiking in the wake of Hurricane Katrina, investigations of gas stations in Arkansas have not assigned blame to retailers, according to a report by the Arkansas Democrat Gazette.
Information gathered so far on retail price increases indicates that these were costs that were passed down to them from up the pipeline, Matt DeCample, a spokesperson for Arkansas Attorney General Mike Beebe, told the newspaper.
DeCample said all of the investigations are not closed, and that Beebe [image-nocss] is still working with more than 40 other attorneys general to look at possible price gouging. Wholesalers in Arkansas and other states are being scrutinized as well, DeCample said.
Ann Hines, executive vice president of the Arkansas Oil Marketers Association, told the paper that she was not surprised that the information does not point to retailers.
But Lane Kidd, president of the Arkansas Trucking Association, remained skeptical, said the report. It certainly seems more than coincidental that all of these branded retail stations have absolutely identical operating expenses, he said, and that the stations sell their retail gasoline at identical prices.
The average price for regular gasoline in Arkansas hit a record of $2.999 a gallon in early September, said the report, citing AAA. But AAA reported Wednesday that the state average had dropped 35.2 cents since then to $2.647 a gallon, which was still up from the month-ago average of $2.533 and the year-ago average of $1.772.
Retailers were not responsible for the large increase in gasoline prices after Katrina, said Mark Cooper, director of research at the Consumer Federation of America. It was the refiners who took the bite out of the consumer's wallet, Cooper said. He added that price gouging is only a symptom of a disease, an uncompetitive, inflexible, anti-consumer industry.
Consumers who are looking for explanations for gasoline prices should consider oil-producing countries and companies as well as refiners, speculators and credit-card companies, Tom Kloza, chief oil analyst with the Oil Price Information Service (OPIS), told the paper.
Ron Keltner, an owner-operator of five stations in the Little Rock area with either the Conoco or Exxon brand names, said retail outlets like his do not benefit when gasoline becomes more expensive. In fact, he told the Democrat Gazette, retailers see margins tighten as they cope with credit-card fees and other stations that want to keep prices as low as possible.
Keltner said the investment for a load of 8,000 gallons of gasoline is now about $20,000, up from about $12,000 last year.
More people are paying with plastic, and, consequently, retailers are losing more in credit-card fees, added Jeff Lenard, a spokesperson for the National Association of Convenience Stores (NACS). For example, a 3% fee on a gallon of gasoline priced at $1.50 was 4.5 cents. At $2.50, it is 7.5 cents. Meanwhile, retailers' margins are not expanding to offset that increase, Lenard said.
He said that in 2004, the average per-gallon margin on gasoline for convenience stores was 12.7 cents, before expenses. That has tightened this year because of competitive pressures related to increasingly price-sensitive consumers.
But plastic transactions offer a number of benefits to retailers, said Paul Cohen, a vice president with Visa USA. Cohen said that includes the safety of handling less money with transactions that involve credit cards or debit cards, which have lower fees than credit cards. Accepting cards is a cost of doing business, he said. And using plastic is a convenience for drivers.
Lenard likened gasoline retailers' attempts to raise prices to a game of chicken. Keltner agreed with that explanation, saying he likes to follow the pricing of other stations around his locations. Usually, I wait until somebody else takes the lead, but there's been some times lately I've taken the lead [because] I just couldn't stand it anymore, he told the paper.
In 2004, about two-thirds of the c-store industry's sales were from motor fuels, but less than one-third of the profits came from those sales, said Lenard. He also said some people might cut back on in-store purchases because of higher fuel prices.
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