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Local News

Mix of factors affect area gas prices

By Deb Gau
POSTED: December 15, 2009

The prices of all consumer goods can change over time. But when it comes to gasoline, area sellers say, people are always watching closely for the changes.

"Gas is a commodity, and people watch that," said Emmett Thomsen, general manager of Prairie Pride, which owns Cenex Ampride locations in Marshall.

So what makes gasoline more expensive in one area or city than another? It's a question without an easy answer, area gas retailers said Monday. There's a host of factors involved, from oil prices and fuel transportation costs to competition among gas stations.

Average gas prices nationwide fell slightly last week, according to data from the U.S. Energy Information Administration. For the week of Dec. 7, the national average price of regular gas was reported at about $2.64 per gallon, including tax, and about $2.52 in Minnesota. Prices around Marshall on Monday were slightly higher, around $2.59.

"There is no special formula," Thomsen said, and prices often present a moving target for area gas retailers.

It starts out with fluctuations in petroleum prices, retailers said.

"I think people don't realize the volatility of the gas market most of the time," Thomsen said. The price per gallon can rise or fall several cents in a single day.

Tara Finnegan, manager-in-training at the Freedom gas station in Marshall, said that while she couldn't comment on how the company sets its prices, gas prices in general are affected by petroleum markets.

"A lot depends on what happens in the stock market, and the price of oil per barrel," Finnegan said. "We can't really anticipate what the price is going to do."

Supply questions can play a part in local gas prices as well, said Thomsen and Jim Nuese of Kirkvold Oil in Hendricks. For example, a Twin Cities gas station might be able to offer lower prices because it's being supplied by one of two small oil refineries in its region.

"You don't have to go through a middleman," Nuese said, while retailers in southwest Minnesota have to rely on gas piped or trucked in.

"If it's piped to other places, it's more costly," Thomsen said.

Comparing Minnesota gas prices to those in South Dakota isn't fair either, retailers said, because South Dakota doesn't have a state gas tax.

Once gasoline is bought and delivered, retailers said the price at the pump still depends on multiple factors. Prices have to balance market changes, profit margins and competition.

Retailers usually try to keep their prices comparable to those of their closest competitors.

In Marshall, Thomsen said, "Realistically, as soon as one person moves (in price), the rest will move with them. And it's not always a specific business that goes first."

Tim Borstad, energy manager at the Farmers Co-Op Association in Canby, said FCA tends to consider competition spread out along Minnesota Highway 68, because that's where the customers travel.

"Minneota and Ghent look at Marshall," Borstad said, while the Canby location has to compete with other gas stations in Canby and neighbors to the north. "And then up north, you have what they call the 212 strip" where gas stations along the Highway 212 corridor tend to influence each other's prices.

While gas retailers need to stay competitive to survive, sometimes prices won't all fall at the same time.

"The worst thing is to go down in price, and then have to go back up," Borstad said. If the gas market is fairly stable, as it is now, he said, gas prices won't change drastically.

 
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Member Comments
View Comments: | 1-23 | Post a comment
MyView
12-17-09 9:50 AM
please forgive me for the spelling errors, it happens when I type to fast and being upset that we are all getting hosed !

MyView
12-17-09 9:43 AM
The information that InMyOpinion state us correct and need to be spread to everyone, please email this to everyone in your address book and tell it to everyone you take to, word of mouth is the best way to spread information on how marshall gas stations are puting it to us!!!!!!!!!!!!!

rona45
12-16-09 10:21 PM
price fixing sounds like a big factor.

InMyOpinion
12-16-09 8:46 PM
Minnesotagasprices dot com shows the Minnesota average for gas right now at $2.450/gallon (a whopping $.15/gallon less than Marshall's gas price!). Only 6 gas stations in the state show a higher price than what we pay in Marshall.

Really, what in the world is going on with Marshall gas stations???

myopinion2counts
12-16-09 8:02 PM
ruralroute you NAILED it... And that goes for me to Tazman1964, I will buy gas wherever it's the cheapest even though I live and work here. I will never give Marshall my business... they don't deserve it!

ruralroute
12-16-09 4:46 PM
South Dakota has taxes on everything -- gas, goods like food and clothing, etc. -- because it does not have a state income tax. Secondly, Marshall is gouging people because a few businesses own a majority of the gas stations and therefore aren't going to get pushed much to drop their prices. Hy-Vee's gas station, for a while (not sure if it still does), used to run that 5 or 7 cent per gallon discount that was popular. Needs to be more of that. Plus, the Marshall attitude is "where else are people going to go?" when it comes to shopping/business in general -- so that arrogance and attitude doesn't foster fair pricing for consumers. Marshall is a town that business-wise and with people like the community services director and former city manager, that thinks it is a suburb. Far from it.

EdmundFitzgerald
12-16-09 3:36 PM
This article states that “South Dakota doesn't have a state gas tax”. This is completely false. Do a web search on “Motor Fuel Excise Tax” and you will see that South Dakota does indeed have a “gas tax” and that it’s virtually identical to Minnesota’s.

Tazman1964
12-16-09 3:08 PM
The excuses Marshall gas stations use are a joke, look in the surrounding communities the gas prices just driving today in Cottonwood, Granite Falls and Monte were all at 2.49 per gallon .10 less than Marshall, also are Casey's and S.A. locally owned? I never buy gas in Marshall anymore unless I buy a carwash at S.A. since then the wash is a dollar off. It seems like price gouging to me.

mtndew
12-16-09 1:04 PM
Nowadays everyone NEEDS or wants to save that extra money so I feel that I will shop for the best bargain and if it means going outside of the town I live in, then so be it. I monitor the gas prices and if it is cheaper while traveling I will buy my gas there. I would like to shop locally to support my home town but all that "extra" spent adds up over time.

EdmundFitzgerald
12-16-09 11:41 AM
“… if one station lowers their price while another stays the same as all of the other, they get fined” – This is vague and misleading. Here’s the TRUTH, from the Minnesota Dept. of Commerce web site: “Minnesota law prohibits any retailer from engaging in unfair discrimination and competition by selling, offering, or advertising gasoline below cost. Minnesota law defines "cost" as the "average terminal price on the day, at the terminal from which the most recent supply of gasoline delivered to the retail location was acquired, plus all applicable state and federal excise taxes and fees, plus the lesser of six percent or eight cents."

Albert
12-16-09 8:05 AM
went thru norwood last night & the gas price was $2.41

JasonsStorm
12-16-09 12:00 AM
Locally owned verse chain owned gas stations prices are all the same. Reason being is that if one station goes up, usually they all have to go up because of the state. because of some stupid state law if one station lowers their price while another stays the same as all of the other, they get fined, if they are reported. $5K per complaint. We need Walmart to bring in a gas station, but I doubt they will, as having a gas station isn't as profitable as it use to be. i was in Cloquet once and they where 12 cents cheaper than their competator. Last thing I will say is that if you goe more than 15 miles to find a cheaper price, you are wasting your money.

myopinion2counts
12-15-09 8:10 PM
Personally I think Marshall is high in price for everything, including gas. But what do ya do, ya need it and they know they got ya!! At least with clothes you can drive elsewhere as it's not a necessity you need every week. OH wait, Marshall doesn't have any DECENT clothing stores anyway, no wonder everyone goes to Mankato or Sioux Falls! LOL

ruralroute
12-15-09 2:42 PM
Marshall gouges on pretty much everything -- restaurants, speciality stores, etc. -- it shouldn't be a surprise that it gouges on gasoline. And the customer service at most of the gas stations in town *****.

56two58
12-15-09 1:20 PM
ticked, I'm in agreement on the issue. I see the inflated gas prices in Marshall and don't like it. I almost always fill up outside or Marshall.

By the way, I don't feel that $0.10 per gallon (or $2 on a 20 gallon tank) is being gouged. And, if I knew the owners and they were active in the community, I wouldn't want to run them out of town for that. Bear in mind that other items cost more in Marshall - for instance building supplies.

My primary point was this - as consumers we have a choice and we can influence this issue greatly with our purchases - more so than an article or internet post on the Independent.

ticked
12-15-09 12:33 PM
56two58. So it's ok to get gouged if the station is locally owned. I don't think so. I myself like to buy things from locally owned businesses but not when they are going to stick it to me. If the locally owned stations want there neighbors to buy from them then they shouldn't be trying to screw them over.

Russell
12-15-09 12:22 PM
If the Dems and the Environmentalists would get out of the way, we could use the resources we have right here in the U.S. Oil, Coal, Nuclear Energy, it's all available-imagine the economic impact!

rangeral
12-15-09 11:55 AM
As I noted in an earlier post, the spread between gasoline futures - FOB refinery - and prices at the pump have historically been no more than 25 cents a gallon - that money pays for distribution and profits at the wholesale and retail level. Over the last three to four years the spread is now at 60 cents a gallon or more. Doesn't take a rocket scientist to see the public is being gouged. Whle there are differences in states due to state tax - and some municipalities have local taxes such as a sales tax, there are many more instances of 10 cent per gallon differences that are strictly monopoly pricing at work. I heged pettroleum products for a living for many years so I know what the price factors are. The public is getting ripped off, including locally.

wheresthebeef
12-15-09 11:35 AM
This is a good refresher on the economics of an industry. But it’s doesn't fully address the “price of gas in Lyon County”. Now we know/are reminded of how gas prices are set (i.e. the oligopoly nature of the business, cost of product, transportation costs, profit margin, state gas taxes, etc.). But why is the cost of gas in Lyon County, particularly the city of Marshall, generally higher than many surrounding communities. How is gas transported to Marshall and from where? How does that compare to surrounding communities Again, I think there’s a pipeline depot on the west edge of town by the airport. Is there Independent reporters?? If so, there should be transportation costs to Marshall gas stations (2 or 3 miles) then surrounding gas stations. So there should be less transportation costs included in the Marshall prices. Come on Independent reporters - you can do better than a general economics lesson. Research this a little bit and challenge the gas station representatives.

56two58
12-15-09 11:20 AM
If you feel you are getting gouged, just fill-up elsewhere. If you can get a better deal somewhere else, take it. At the same time, bear in mind that some of these business are locally owned and are actively supporting & investing in our community. But, back to my main point, let's not forget how big of an impact our pocket books make.

Elizabeth
12-15-09 11:12 AM
Last I checked Montevideo and Pipestone are also in southwest Minnesota and their gas prices are still $0.10 cheaper per gallon than Marshall. So what's their secret?

InMyOpinion
12-15-09 8:17 AM
I applaud the Marshall Independent for running this article, although the information and quotes from our area gas sellers is simply to try to justify why our local gas prices are unreasonably high!

Yes, there are a host of factors that determine the price of gas: cash gas price plus freight/transportation (basis) plus the margin added by gas sellers (sellers need a certain amount of margin to survive and stay open too).

OPEC is a cartel that is organized to set a good portion of the world's oil supply and wholesale price. Perhaps we have our own local cartel?

Consumers remember those businesses that try to gouge them and business often shifts accordingly. I know, I often times buy my gas OUTSIDE of Marshall now!

Thanks Marshall Independent, and keep reporting on our area gas prices and informing consumers!

countrygal
12-15-09 7:54 AM
Is the Independent trying to "smooth" over the ruffled feathers of the gas stations because of the "Thumbs Down" that appeared last week? What a bunch of baloney in this article. The consumer's are not stupid and do realize the volatility but consumer's also can check the Internet for gas prices for anyplace they travel to. Marshall is out to gouge you when it comes to gas prices.

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