Why does filling up your car in Cache Valley cost so much?

By KC Muir

October 16, 2006 | LOGAN - From an outsider's perspective, most people around Cache Valley probably look a lot alike. Nonetheless, we all are different in our thinking and the way we view the world. It seems as though, however, that gas prices are driving us all crazy.

How is it that we have some of the lowest wages in the country and the some of the highest gas prices?

"Gas prices are way too high here considering that the state has oil production facilities and the natural recourses available to produce our own oil," said one local man. "I heard that the problem was that the local retailers have lost money over the last year so they are trying to make up for it now while they can."

So how bad is this problem? Try 33 cents a gallon bad. As of Oct. 10, the average price for regular unleaded gasoline in the U.S. was $2.26 cents a gallon. Here in Cache Valley it is $2.59. So let's say that you drive your typical compact car that has a 15-gallon tank and you fill up your car every other week. By paying that extra 33 cents, you are spending about $5 more then the rest of the country every time you fill up. That may not seem so bad, but when you add it up, we are talking about $120 a year. Ouch.

"It's making it harder to get by," said one local woman. So is it just bad in Cache Valley? The average gas price in Utah is $2.57 a gallon with the lowest being $2.32. Here in the valley, we average $2.59 with the lowest being $2.49 a gallon. Did you know that in some places in the country they are paying $1.90 a gallon? I don't remember paying that little since I was 16 (seven years ago). To see the current lowest gas prices in the state click here .

"I heard that if you slow down and drive the speed limit, then you'll get better gas mileage. I've tried that and when that didn't work I went and bought one of those Flying J membership cards so that I can get an extra cent off," said a friend of mine. He is actually on to something. Right now, Flying J is the cheapest place in the valley to fill up. At $2.49 a gallon, it is 16 cents cheaper then half a dozen other places around town that charge $2.65 a gallon.

Flying J's biggest competitors on price are Maverik and Sam's Club. According to the business manager at Sam's Club, their gas is sold at a wholesale price or sometimes a little more depending on what the other local stations are charging. They call this process "comp shopping" to insure they have the lowest prices on gas and other items locally.

Sam's Club is unique in that they can afford to sell their gas almost as cheap as they want to because most of their profit is generated by membership fees. In fact, they often use their low gas prices as a marketing tool to get people to purchase a membership. At the moment it costs $35 to become a member and have access to their gas pumps. I cannot imagine that it would be necessary to purchase a $35 membership if all you use it for is gas, but to each his own.

Maverik and Flying J are often competitive and sometimes lower than Sam's and there is no membership required to fill up, but both offer an incentive of 1-3 cents off each gallon if you sign up for a free membership card. This is by far is the best deal in town and one that has saved me a little bit of pocket change.

Although I don't have specific numbers as too which station in the valley does the most business or makes the most money, I have noticed that both Maverik and Flying J are constantly busy and sometimes can be a hassle to fight the lines and idiot drivers (a story for another time). In fact, all of the people that I have asked, normally do fill up at Maverik or Flying J. Both stations also use their low gas prices as a marketing tool to get people to patronize their businesses and generate revenue through the sale of goods and merchandise. This stabilizes their profit margin, thus allowing them to sell gas a bit cheaper. Other stations around the valley; however, do not take this approach.

Chevron, who can be found at six different locations around Cache Valley, tend to always be the most expensive place to fill up. Why? Being the second largest gas station chain in America (next to Shell, which is uncommon in the valley), they attract business through location, convenience, advertising, and other amenities like car washes and fast food outlets. Basically, they don't worry about competing price wise with other stations, because they already have a large customer base.

Then you have you middle of the pack stations like Phillips 66, Tesoro, and Sinclair that are semi-competitive price wise and seem to just kind of steadily exist. Anyway you look at it, they are all still more expensive here then almost anywhere else.

On Oct.13, there appeared an article on the Deseret Morning News website written by Dave Anderson that claims a state commission headed by Governor Huntsman, found that local gasoline retailers are in fact ripping off consumers. According to the article, "The profit margin for gasoline is small, often only a few cents per gallon. It appears, however, that during recent weeks some retailers have been making a profit margin several times greater than average."

It goes on to say, "About 30 percent of Utah's crude oil comes from Canada, 15 percent from within the state and the rest from Colorado, Montana and Wyoming." So it is true that we are getting screwed! Nevertheless, it is encouraging that the state government is at least monitoring the situation. Hopefully they will step in and stop this nonsense.

For now, your best bet is to jump on a bicycle.

NW
RB