A Great Bend Tribune reader complained over the phone this week about the continued resistance by local gasoline retailers to lower their prices. Pump prices in Great Bend have been locked at $3.43 for weeks, even as they have tumbled elsewhere, making the per gallon cost among the highest in Kansas.
“That is robbery,” the caller said. “Great Bend is getting to the point you can’t afford to live here.”
That may be an exaggeration, but the sentiment is understood. When one can drive a half hour to Lyons and save 20 cents or more per gallon, it would be easy to feel this way.
Years ago, gas was more expensive here than just about everywhere else. A motorist could almost be assured of paying 10 cents more than in other communities.
However, recently, even as prices have skyrocketed, Great Bend has been competitive. It may not have been the lowest, but it was not the highest either.
But, this has changed in the past month or two across Barton County.
Petroleum industry analysts say this is caused by a lack of healthy competition, that no gas retailer wants to be the first to drop the price. However, we are higher that other communities that have even fewer stations.
These dealers have a profit margin that varies from market to market, but average between 5 and 15 cents per gallon. Under ideal conditions, they can spike in the 30-40 cent range.
Granted, the oil and gas industry is a complex one. The turn of a spigot in Alaska, a tropical storm in the Gulf of Mexico or a riot in some Mideastern desert can cause “international market uncertainty” and impact prices.
But, when stations operating under the same banner within an hour of each other have vastly different prices, that causes local market uncertainty. Here in Great Bend, retailers refuse to budge.
There is, however, the dark conspiracy that always surfaces when gas prices remain unchanged. There are variations, but it generally goes like this – a group of local dealers get together and collude over setting the price.
Is there a cabal that meets in a back room or over coffee and sets what we will pay? Doubtful.
Is there price gouging going on? Again, hard to tell.
Gasoline is a supply-and-demand product – the more people want, the more it costs.
According to the Kansas Attorney General’s Office, there are two types of price gouging recognized in Kansas: Unconscionable price gouging and profiteering from disaster. Unconscionable price gouging occurs when a consumer is charged a substantially higher price for an item or service that is readily available to that consumer for a much lower price.
But, the AG notes, there is no bright-line rule for when a price is excessive. However, the Kansas Consumer Protection Act indicates the price must “grossly exceed” prices charged in similar transactions. Merely charging higher prices than competitors is not illegal.
GasBuddy.com analysts did warn Thursday that there may be price hikes related to refinery issues suffered by four Midcontinent refineries in the last 10 days, including a refinery in El Dorado operated by HollyFrontier that has operational issues, and the key Coffeyville Refining plant in Coffeyville that had a fire. In all, these four refineries represent nearly 900,000 barrels per day and problems are cutting that in half. GasBuddy stresses that Midwestern increases are not part of a new long-term uptrend.
Nonetheless, as the price remains high, more and more folks are complaining. They have even said they leave town to fill up and, while they are away, go out to eat and shop. That is money lost.
Perhaps local gasoline retailers should be more responsive to world around them.