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Traffic spilled onto Sangamon Avenue and Peoria Road
last week as two dozen noontime commuters crammed onto the lot of the
Thornton’s Oil store, hurrying to fill up their tanks for $2.58 per
gallon. Most gas stations in Springfield had already jacked up
their prices by more than a quarter per gallon earlier in the day. “That is a pretty big gap for the Springfield
area,” says Nicole Niemi, a spokeswoman for the AAA Motor Club of
Chicago. Although it’s not unusual for per-gallon
gasoline prices to vary between states, or even within the same state, fuel
prices in the capital city can differ by as much as 30 cents. Why? For starters, gas stations on opposite ends of
town compete not against one another but against those close by. And the
price of gasoline, like the price of any commodity, fluctuates minute by
minute — and petroleum markets are open around the clock. Crude-oil prices, refinery-processing capacity,
distribution costs, marketing, taxes (state and federal taxes alone account
for about 60 cents of every gallon of gas sold in Illinois), rent, and
other operating costs all figure into how much retailers decide to charge
for their gas.
Niemi adds that international events also play a
significant role. Recently, fighting between Kurds in northern Iraq and
Turkish forces has caused instability in the market and sent per barrel
crude oil prices soaring, she says. (Oil was selling in the
mid-$80-a-barrel range this week — more than 50 percent higher than
where prices started at the beginning of 2007.) One supplier in a particular area could dictate the
market for an entire region, says Bill Fleischli, executive vice president
of the Springfield-based Illinois Petroleum Marketers Association. The price of gas on the city’s North End is
often cheaper than gas in other parts of the city — possibly,
Fleischli says, a result of the presence of the Wal-Mart on North Dirksen
Parkway, where customers using one of the company’s credit cards can
shave a few pennies from the price per gallon at the Murphy Oil station. “If you are in competition with [Wal-Mart], you
have to beat them, or you lose 10 percent of your business for every penny
you’re above them,” Fleischli says, adding that gas prices
reflected on such gas-tracking Web sites as AAA’s Fuel Gauge Report
and GasBuddy.com are merely flashpoints that occur before the market has
adjusted. An executive with a locally owned fuel company, who
spoke for background only, says that the world market isn’t always
the force behind the unpredictable nature of retail gas pricing. However,
he does agree with Fleischli that the business is a competitive one. “I have a tough time understanding why people
price on the street the way they do, because sometimes we do it at a
loss,” he says. “You’ve got one guy who’s willing to
sell his gasoline at maybe a nickel-a-gallon loss, so if you’re right
down the street from him, what do you do? Do you let him take all the
business, or do you go down and match him? You gotta go match him, and you
hope he doesn’t stay down there very long. “It’s a guessing game,” he says.
Contact R.L. Nave at rnave@illinoistimes.com.
This article appears in Oct 18-24, 2007.
