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Sunday, September 04, 2005

The owners of the gas stations are not the ones to blame

People often think that the owners of gas statioons are the ones to blame for the high price of gas. More often than not, this is simply not the case. They have to raise their prices to pay for the gasoline that they sell. Add to that they still have to pay their bills and meet a payroll. The profits that they make from gasoline are extremely slim.

Of course, there are the morons that drive off without paying for their fuel. Even though they don't pay for their fuel, the owners of the gas stations still have to pay for it. That definitely doesn't help with gas prices.

I found this story at USA TODAY. It shows the shock of gas prices across the country. It goes as follows.

Gas shock echoes across USA

By Kevin Maney, USA TODAY
In all sorts of ways, in every corner of the USA, the incredible run-up in gas prices is tearing into everyday life.

Since Hurricane Katrina struck the Gulf Coast, gas prices in much of the country have soared past $3 a gallon. Six gas stations in Atlanta hit $3.999 Thursday. A few regions saw shortages and gas lines — echoes of the 1970s. Consumers are in shock. Politicians are expressing outrage. (Q&A: Questions drivers ask most often, and most angrily)

LOOP back in business to unload oil
The Louisiana Offshore Oil Port said Thursday evening that it has resumed pumping operations at its offshore oil facilities in the Gulf of Mexico. The first supertanker to visit the Port since Saturday was being unloaded, using emergency generator power, and delivered into pipelines that feed several refineries.It won't be able to operate at full capacity until commercial power is restored.

On a more profound level, the secondary effects are starting to take hold. In Phillips, Wis., police officers walk beats instead of patrolling in cars to save gas. In Arkansas, attendance at a county fair dropped, the organizer believes, because people didn't want to drive there.

School districts are holding emergency meetings about keeping within budgets. Businesses find themselves in a bind as trucking companies pass along rocketing costs of shipping. And many consumers say gas costs are cutting swaths out of their household budgets.

"If it goes up to $4 a gallon, I don't know what we're going to do," says Robin Biesterveld, 38, a medical transcriptionist in San Jose, Calif. Thanks to gas prices, she and her husband have recently cut back on extras such as dining out and dry cleaning.

Consumers are flocking to the Internet for help. They've besieged GasBuddy.com, the best-known site for finding cheap gas. The site's message board shut down on Thursday. Co-founder Jason Toews says the Minnesota-based Web site averages 300,000 hits daily but was on pace to get more than 4 million Thursday.

"We've just been overwhelmed," Toews says. "Our server couldn't handle it."
Here and there are stories of flat-out craziness, such as when the T-Bird Mini Mart in Springfield, Vt., decided NOT to raise its gas prices.

T-Bird stopped raising its prices midday Wednesday at $2.60 a gallon while all the other gas stations around kept pushing their prices higher — until T-Bird was charging 30 cents a gallon less.

People started showing up from as far away as New Hampshire. Lines snaked through town. Neighboring businesses summoned police, who directed traffic for hours. So overwhelming was the traffic, says clerk Jason LaValley, "We had to raise (the price) to keep people away." The store was selling gasoline for $3.19 Wednesday night, more in line with the competition.

Managing the jump

Far from the pumps, businesses and local governments have been having meetings the past few days at which managers are working on ways to manage the price jump.

Gas prices in review

In Romulus, N.Y., The Advantage Group helps businesses sell used or surplus equipment, making about 250,000 shipments a year. Freight quotes are double what they were six months ago, CEO Neal Sherman says.

So he's been trying to find any way possible to save on trucking costs. He just hired someone to — as Sherman called it — "efficiently palletize" shipments. In other words, the employee will pack what might've gone on two trucks into one.

"Everyone in the chain of logistics is adding to their prices," Sherman says. "Everybody's on edge about how this will affect businesses."

In the middle, trucking companies say they're getting walloped. Gas prices are rising so fast, they're making shipments based on prices quoted weeks ago and losing money. "Many of the small trucking companies will panic or just go out of business by the end of the year," says Jerry Breeden of The Trucker, a trade publication.

In Ithaca, N.Y., Tompkins County Consolidated Area Transit — the local bus system — is locked in a contract fight with the United Auto Workers Local 2300. One of the reasons TCAT says it can't offer the union what it wants is because the rise in fuel prices is cutting into finances.
School districts feel particularly vulnerable. In suburban Denver, officials for the Jefferson County school district say fuel prices mean transportation could cost $250,000 to $1 million more this year than planned. "It's awful," says Jan Clopton, the district's transportation director. "We are working on every avenue to cut costs." Among options: fee increases for student field trips.

The Lansing, Mich., school district is looking at some of the same solutions, including fewer bus stops, which means many students would have to walk farther to each stop. Nathan Rowen, director of transportation, says he's not sure the district has enough money budgeted to cover the price increases. "It's not going to be pretty this year," Rowen says.

Police departments face similar concerns, especially in small towns with small budgets. In Phillips, Wis., Police Chief David Sonntag started having officers patrol on foot one hour a day to ease the cost of gassing up patrol cars, according to the city's Web site.

In Arkansas, Washington County Fair President Doris Cassidy added gas to the reasons she saw a slip in attendance. "Everything is so hot, and gas prices are so high," she told a regional Web site, NWAonline.com. "I don't think people have as much money."

For consumers, prices are going up so fast that many report watching the signs change while they're pulling up to the pump.

At about 11 a.m. Thursday at the AM/PM in Mesa, Ariz., Fernando Lundi Faust, 54, was pumping gas when an employee changed the price of regular on the sign to $2.99 a gallon from $2.79. Customers pulling in turned around and left.

Motorist club AAA reported an average price of $2.680 a gallon for unleaded regular gasoline Thursday, up more than 6 cents overnight — considered a huge jump. By Friday, that has risen to $2.867.

While it's hard for most consumers to work up much sympathy for gas station owners, Randy Markham offers a glimpse into the situation they're facing.

Markham, 64, owns three Sunoco gas stations in Michigan and supplies fuel to six others. He says the wholesale prices he pays for gas increased 35 cents from Wednesday night to Thursday morning, after jumping about 45 cents earlier in the week. "Every time we get another load of gas, it's more expensive," Markham says.

As of Thursday afternoon, he was selling gas for about $3.39, at a 7-cents-a-gallon margin. "A 7-cent margin? We can't pay the bills with that. We are strapped," Markham says.
In Chandler, Ariz., Nezar Alsai, owner of the independent Blue Diamond Fuel, says customers were screaming at him Thursday about the $3.09 price of regular.

"They say, 'Shame on you! You're taking advantage of the situation,' but I'm not," Alsai says, whipping out the latest fuel bill from his supplier, which shows he is paying $3 a gallon for regular.

Alsai expects the wholesaler wants $3.10 a gallon for the next load, but he's holding out. "I am waiting for the price to drop. I expect I will run out of gas and don't know what to do," he adds.
And that's a fear that's spreading — fuel shortages, leading to panic buying and price gouging.
There have been spotty reports of gas shortages at Arizona service stations during the past few days, especially at independents that rely on fuel purchases from the spot market. One station in suburban Mesa was flooded with motorists who apparently got caught up in a panic-buying frenzy. The station ran out of gas for about six hours.

Rush to fill up

In Nashville, some gas stations that normally sell 1,200 gallons a day have been selling 5,000 gallons a day as consumers rush to fill up, says Emily Leroy, associate director of the Tennessee Oil Marketers Association. "There are shortages and outages all over the state," she says.

In Oak Park, Ill., BP station owner Bob Sloan says he had one woman ask him if he sold "buckets" to buy gas to go. She wanted a reserve for a weekend trip to St. Louis. He suggested she buy a five-gallon can at a hardware store and come back. He said he doesn't expect shortages this weekend, even though his station ran out of regular on Thursday.

Officials are trying to keep the public calm and ask that they buy only what they need.
In Alabama, Gov. Bob Riley asked citizens to "do their part by purchasing and using fuel responsibly." He added, "I'm hoping this will be a short-term disruption."

"One thing we need to guard against is panic buying," South Carolina Gov. Mark Sanford said Thursday. "It exacerbates the problem."

Yet a lot of people are wondering how it could get worse. Such as Kimberly Ferrell of Middletown, Del. Buying gas on Thursday, she says that fuel costs might mean she can no longer send her 4-year-old son, Michael, to day care at $50 a week. "Gas is taking up the money I spend on day care," she says, then she glances up at a BP station across the street. "Look at that — $2.84 a gallon," she says. "I paid $124 this week for gas."

Of course, there are always alternatives. Less aggressive driving is always good. So are options such as carpooling. Riding a bicycle doesn't use any gas at all. If you don't like the high price, you should keep your options open.


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