INLAND GAS PRICES
What Impacts Gasoline Prices
Inland is proud of the role we play as part of the nation's leading
source of motor fuels - convenience stores sell about 79 percent
of the gasoline that America's motorists buy every year.
When gas prices go up, everyone is affected. But what many
people might not know is that when gas prices go up, it does not
also mean that Inland is making more money on gas sales. Typically,
Inland stores actually make less money on a sale as prices go up,
because Inland does not pass along the entire price increases to
our customers.
The gas you put in your tanks is the end product of a very long
supply chain with the gas nozzle at Inland as the last link.
The following article looks at what goes into the price of a gallon
of gas, the factors that cause prices to go up and down, and why
the price can very from state to state, town to town, street to
street, even block to block.
Inland wants you to know and understand what you are paying for
when you purchase a gallon of gas.
Crude Oil -
Nearly half - 42 cents of every dollar - is the cost of crude oil
Taxes - Almost one third
- 29 cents of every dollar - are federal, state and local taxes.
Refining - 16 cents
of every dollar - are for the costs of refining crude oil into gasoline.
Retailing - Just over
one dime - 13 cents of every dollar - are left for inland to sell
the gas.
Profit - This is what
is left of the 13 cents after the store costs associated with the
sale (transport, labor, utilities, maintenance, supplies) plus credit
card fees (typically 2-4 percent) and other additional taxes are
all paid, not a lot.
What makes the price go up and down?
There are usually two factors behind a fluctuation in gasoline
prices: a change in the price of crude oil, or an imbalance in supply
and demand.
- Price of Crude Oil: The world market
determines crude oil prices. OPEC has the greatest potential
to affect prices, since it controls about 40 percent of the world's
oil production and 67 percent of the world's crude oil reserves.
Other factors can also affect the price of crude oil, such as
supply and disruptions caused by overseas events or natural disasters,
or even rumors or speculation of potential shortages. A
change in the wholesale price for gasoline that your Inland store
pays to provide you with fuel.
- Supply and Demand: Crude oil is refined into several
different fuels and oil based products, such as gasoline for automobiles,
diesel fuel, heating oil, jet fuel, or chemical products.
Changes in demand for any of these crude oil based products can
affect gasoline prices. Weather also has an impact - demand
for gasoline increases in the spring and summer months as people
drive more. However, this increased demand also increases prices
for crude oil, much the way more bids for an auction item increases
the price. In addition, government regulations affect the
price you pay at the pump.
Here's how:
- Boutique Fuels: Only 20 years ago, there were
only four different kinds of motor fuels required in the U.S.
Today, there are close to 30. Over the past decade, various
federal, state, and local fuel requirements have required
convenience stores to sell new formulations of gasoline that
address different air quality concerns across the U.S. - these
formulations are known as "boutique" fuels. While
these regulations were aimed at reducing air pollution, they
have also had the effect of placing tremendous pressure on
the nation's refining and distribution system, and make it
more likely that areas with unique fuel requirements could
see supply shortages and temporary price spikes. In addition,
many areas of the country require different fuels for summer
months. This means that existing supplies of winter fuels
must be completely exhausted, making it more likely that there
will be temporary supply shortages. Everyone in the petroleum
industry, including inland, is proud of their role in helping
to reduce emissions, but consumers also need to understand
that the proliferation of "boutique" blends impacts
prices.
- Capacity: The U.S. petroleum refining system
is running at close to capacity, and a pipeline distribution
system that was designed to handle fewer different kinds of
fuels. As a result, the system for getting fuels from refiner
to retailer has little room for error – a problem at a refining
plant, a break in a pipeline, or any other unplanned disruption
can leave any part of the country in short supply. For example,
a pipeline break in 2000 that happened just as new summer-blend
fuels were being introduced led to some big price spikes in
the Chicago and Milwaukee markets. Also government regulations
have made it harder for the refining industry to expand –
no new refineries have been built in the U.S. in over 25 years.
Knowing what is behind Inland prices
Inland is part of a unique business – in no other business are prices
posted in gigantic numbers on the side of the road. Everyone in
town knows the price of gasoline today – and you can be assured
that Inland is doing everything we can to stay competitive and stay
in business. By understanding gasoline prices, the valued Inland
customer can make more informed choices about their money.
PRESS
RELEASE- NOVEMBER 28, 2005
Official Statement from Southwest Georgia Oil Co., Inc. |
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Southwest Georgia Oil Co., Inc. owns and operates 27 convenience
stores and travel centers in Georgia, Florida, and Alabama.
The company opened its first convenience store in 1973 and
since that time, we have worked hard to provide our customers
with the cleanest, friendliest stores offering the best products
at fair prices. Because of this goal shared by every employee
and each officer of the company, we are deeply disturbed by
the recent charges of unfair pricing at our store in Chipley,
Florida handed down by the Florida Department of Agriculture.
We strongly deny any unfair prices at this location –
or any other. Our ability to determine reasonable prices during
the recent hurricane devastation was severely tested since
our fuel suppliers were ramping up their costs many times
a day. We firmly believe that, in spite of costs that were
escalating at unprecedented rates, we never violated the intent
of the pricing statutes in Georgia, Florida or Alabama.
The Florida Department of Agriculture, as well as other state
agencies in all three states, has requested information regarding
our pricing and our costs for multiple locations over an extended
period of time. We have supplied all the information they
have requested and cooperated with them fully because we have
nothing to hide. With the exception of one day in Chipley,
the agency investigations found us to be in compliance with
the statute and for any charges of unfair pricing to be totally
without basis. The charges brought against our Chipley store,
in our opinion and based on documented information, are also
incorrect though this is the one case where the agency disagrees
with us. According to the press release issued by the Florida
Department of Agriculture, our price in Chipley was unfair
because it increased by 75.7 cents in one day. That is completely
false. Although there was a price increase at Chipley on the
day in question, it was 35 cents - less than half the amount
reported by the agency in their press release. We agreed to
settle with the State of Florida in order to put the situation
to rest but did not concede to violating the fair pricing
statute.
Our goal during the recent state of emergency, was to maintain
our profit margin at a level that was normal for our company.
For instance, at Chipley, our margin on unleaded gasoline
for the 30 days prior to the state of emergency was 12.26
cents per gallon. During the time period investigated by the
Department of Agriculture (45 days), the margin was 8.45 cents
per gallon - a decrease of almost 4 cents per gallon. That
is why we dispute the charges brought against our company.
We are proud to be a leader in customer service for our industry.
We are proud to have the best employees in our industry. We
are proud to be good corporate citizens by supporting a wide
variety of civic, educational, and charitable organizations
in Georgia, Florida, and Alabama. We are, most importantly,
proud to give our customers the best we have to offer –
in service, in products, and in pricing – and we appreciate
the opportunity to serve our customers every day.
Mike Harrell
President |
IF YOU HAVE ANY QUESTIONS, COMMENTS OR CONCERNS REGARDING INLAND,
PLEASE CONTACT THE INLAND HOME OFFICE AT (229) 246-1553
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