A review of daily gas prices on www.mississippigasprices.com is revealing.
Gas prices throughout the nation, as well as Mississippi, are falling, especially from the record-high prices of a year ago, yet Columbus stations consistently charge among the highest prices in the state.
Industry experts say those high prices are the result of several factors, including customers” willingness to pay them.
“We have seen a very slight and modest decline in the price of gasoline,” said American Automobile Association spokesman Don Redman, noting consumers may see “more dramatic drops” in gasoline prices after July 4.
“Gas prices over the next few weeks will tend to drop 5 to 15 cents a gallon, probably closer to 5 to 10 cents in Mississippi,” predicted Patrick DeHaan, senior petroleum analyst at GasBuddy, a Web site that tracks daily fuel prices all over the country. “This is a result in increase in gasoline stockpiles that had been very low until two weeks ago. As refiners increase production, gas prices are coming back down.
“Mississippi is below the United States” national average,” he added. “You have a lot of refineries (in the state) running at or near capacity.”
Produced year-round, gasoline volumes increase during the summer driving season, although AAA officials, today, projected the number of Americans traveling on vacation over the Fourth of July holiday weekend will decrease by 1.9 percent from 2008.
Columbus competition, pricing
According to the Mississippi Petroleum Marketers and Convenience Stores Association, the gas prices paid by consumers reflect the cost to produce and deliver gasoline, including the cost of crude oil to refiners, refinery-producing costs, marketing and distribution costs and the retail station costs and taxes.
The prices paid by consumers also reflect profits or losses of retailers, marketers, distributors and retail station owners.
Federal, state and local taxes also are large components of the retail price of gasoline; taxes, not including county and local taxes, account for about 27 percent of the cost of gasoline.
The MPMCSA — a non-profit trade association representing the petroleum and food industries — estimates refining costs and profits comprise 15 percent of the retail price of gasoline and distribution, marketing and retail dealer costs and profits make up 14 percent of the cost.
Prices at the pumps also reflect local market conditions, like the location of the station and the marketing strategy of the owner, as well as consumer”s shopping habits.
“The price of crude oil accounts for about half the price of gasoline and then approximately 40 cents per gallon (are assessed in) state and federal taxes,” said Redman.
“Historically, service stations make approximately anywhere from between 5 to 10 cents per gallon in profit,” he added. “The higher the prices go, the less the profit.”
“It”s a free market,” said MPMCSA Executive Director Jerry Wilkerson. “Prices are set in areas for gasoline, just like they”re set for shoes, pants or any other goods or services. Competition is what controls prices. They”re basically what the market will bear.
“There”s the cost of doing business, overhead, and you”ve got areas with higher transportation costs,” he added of retail pricing. “There are a lot of different factors that go into pricing.”
“A lot of the time this is due to competition,” DeHaan explained of differentials in pricing in various regions or areas of the state. “Perhaps there is less in Columbus. Also, proximity to major refineries (should be taken into consideration). (And, there is) zone pricing. The oil industry actually goes in and, depending on the area of the community, will set prices for their stations, as they see fit.
“If Columbus is willing to accept the higher price, they will charge the higher price, because they know people will pay for it,” he added. “(Prices) will drop, but it will take multiple days. The number of stations results in better competition. And areas with wholesale clubs tend to be lower in price, simply because the wholesale clubs pull everybody lower.”
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