Tom Palace, executive director of Petroleum Marketers and Convenience Stores Association of Kansas, takes your questions about gas price fluctuations.

macon47

ron marr told me if everyone cut their gasoline usage by 20%, and stay at home more, the price of gas would drop?
what do you thing
thanks

commensense

The gas companies ripping off us at the pumps is only part of the problem, other companies we buy from will have to charge us more because their expenses for deliveries go up, so to maintain their profit they will have to raise their prices, if the corn gas started taking a big part of oil companies business, they would find a way to lower prices to compete, why can’t oil companies decide to make a decent profit instead of hurting us so bad, especially when the stories about executives get these huge bonuses that they would have trouble spending it all, is there any kindness in the oil business

toolman

recently crude prices climbed to a new high, when i calculated the change in price it was something like 2% change.
there was an immediate rise in pump prices the same day that was at least 3 times when calculated using the new and previous pump prices. how many gallons of gas come from a gallon of crude, and why is the price change gas
not directly the same percentage as crude prices? also, premium gas prices used to be only 10 cents per gallon more than regular, now its 20 cents,
why the change and how does that fit into the drop into demand for premium fuel? we keep being told the prices are driven by supply and demand, while it has been reported that there is a drop in demand for premium fuel, why has there not been a drop in differential pricing?

DBAWalt

Is there any public records of what price each store buys and sells gasoline? If so, where?

Related, is there any historical record (day by day, for example) data for gasoline prices by store?

DBAWalt

I don’t believe the wholesale price of gasoline goes up when the students at KU go home, so why does the retail price go up at that time?

Moderator

Hello everyone, we’ll be starting the chat with Tom Palace in just moments.

Tom Palace

Hello glad to be with you today

lastcall4oh

Tom,

I have heard it said that gas prices are set by retailers based on the cost to them to replace the gas in their storage tanks. If this is true, why do prices vary for stations that get their gas from the same distributor? For example, the three Zarco 66 stations in town on 6th, 9th and Iowa and K-10 will often times all have different prices for unleaded.

If this is not how prices are determined, how are they, and why the fluctuations and variability of gasoline prices?

Tom Palace

Competition plays the most vital role at the local level. If the competition across the street is one-two cents lower, most retailers will lower their price to meet competition.

uglydutchman

When can we expect to see biodiesel at our pumps? Why is Kansas one of the major producers of biodiesel so slow in ditributing B5/B20?

Tom Palace

First off, Kansas is not a major producer of Biodiesel. Last session the legislature passed legislation to incentivize bio products with hopes to bring more bio into the market. We have one major supplier of biodiesel in Wichita and at this time bio is splash blended with diesel fuel and used as an additive. We will be seeing more of biodiesel in the future and hopefully at the pump as well.

usaschools

Hi,
Whenever the students leave town, gas prices go up even though oil prices do not. When they return, the prices jump again. This happens every year. I think it is a form of price fixing. Can you comment on this? Also, why is gas often higher in Lawrence and Manhattan than in smaller non-college towns?

Tom Palace

I’m not sure where to start with this answer. But, on May 1, of each year fuel suppliers are required by EPA to burn different types of fuel based on the driving season. School gets out in May and thus the price change at the pump changes based on EPA requirements. I can’t comment on why prices vary from city to city, price is based on supply and demand as well as competition. Store owners set a price that they think people will pay.

DBAWalt

Why are gas grade prices always exactly 10 cents different – does it cost exactly 10 cents more to produce 89 octane than 87 octane? If not, which grade is NOT priced based on market forces?

Tom Palace

All fuel prices are based on market forces. As you can imagine higher octane fuels cost more money at the wholesale level. And different grades of fuel are not always 10 cents apart. However now that ethanol has been introduced into the market these price differentials should change in the months to come.

justthefacts

We all know that the “laws” of supply and demand mean that when suppliers and middle men pay more for gas, the consumers end up paying more. However, what about the large discounts that some stores (e.g. Dillons) are still giving on gas (to some customers it can be up to 15 cents a gallon). Are those suppliers of gas taking a loss, or is there still a profit made on the sale?

In other words, what is the typical mark-up (or profit) built into each gallon of gas sold retail?

Tom Palace

The big box retailers can offer the huge discounts because they receive marketing incentives from companies for products sold inside the store. Like Pepsi and Coke products. And in some cases they purchase contracts from gas brokers that may work to their advantage. Purchasing contracts in the open market is nothing short of gambling but sometimes you win and sometimes you lose. Also, many times big box retailers sell gasoline as a loss leader and yes they are losing money much of the time. They make their bigger margins on products inside the store, not at the pump.

Sigmund

Would you discuss the amount of money Oil Companies make compared to the amount of taxes collected by Federal and State govenments per gallon of gasoline?

Moderator

Hi. We’ll take a couple more questions today.

Tom Palace

Oil companies make money refining gasoline and selling it to a distributor, Fed and State taxes are 24% of a gallon of gas. I don’t have any statistics that compare taxes paid on a gallon of gas and how it relates to profit to the oil companies. In Kansas gas is 24 cents per gallon Federal tax is 18.4 cents per gallon. diesel taxes are higher at the state level only.

jdm3437

Tom,

How does ethanol affect the price of gas today in Kansas?

Tom Palace

Ethanol has an idex that is priced along with gasoline. Ethanol today cost more than gas. But ethanol is here to stay as well as biodiesel. Ethanol is an octane enhancer and many times you will see the price of mid grade gas the same as unleaded fuel. But not today. Today we can’t even get ethanol because the California and Texas are taking most of the inventory. Why? Because EPA and the federal government banned MTBE another octane enhancer.

justthefacts

How much gas sold to retail customers comes from the US and how much comes from oil/gas exported from other countries?

Tom Palace

About 35% of the gas sold to consumers in the US is refined domestically.

Moderator

Thanks, Tom, for taking questions today. Tomorrow’s chat will feature Dr. Wes Crenshaw, who co-authors the J-W’s weekly “Double Take” column about youth and family issues. The chat begins at 1:30 p.m. Thursday, but you can submit an early question at http://www2.ljworld.com/chats/2006/jul/13/dr_wes_crenshaw/