Pondering at the pump
Apr 07, 2010 | 855 views | 0 0 comments | 15 15 recommendations | email to a friend | print
DUST IN THE WIND by Bill Boyle

I know that I may be fighting a losing battle here. However, after a few recent letters to the Editor and the Life is Good article on page 7, I feel that the opposing viewpoint needs to be expressed if we are to fairly address the perennial argument about gasoline prices in San Juan County.

Concern about gasoline prices is an issue that percolates in San Juan County and every other corner of the United States.

Every time the price begins to rise (as it always does in the Spring) we hear all about it. Gas prices seem to be a favorite topic whenever a conversation begins to lag. First, it is the wind and then it moves to gas prices.

The sentiment is completely understandable in San Juan County because we are so reliant on gasoline. For those of us lucky enough to live in isolated rural areas, such as San Juan County, doing just about anything requires a large amount of travel. We travel more than most, earn less than most, pay more for gas than most, and have older (and less efficient) vehicles than our friends in the city.

A friend who spent several years managing an oil and gas distribution business in another area laughed when I called and asked him about the current gasoline “grass fire” raging in San Juan County.

He said that the business is very difficult and that low-priced convenience stores basically sell gasoline at cost or even less than cost. Gas prices become a “loss leader” simply to get customers in the store. Any profits are generated from the sale of items in the convenience store. (That makes sense, since Diet Coke sells for an equivalent of up to $10.88 a gallon in convenience stores.)

Of course, it requires a large volume of sales to make a profit in a low-margin operation. Simply put, isolated rural areas, such as San Juan County, simply do not generate a high volume of gasoline sales.

As a result, generating enough revenue to pay the bills and the employees has to be through a smaller volume of sales. Simple economics predicts that prices will go higher.

We shouldn’t be surprised if gas prices are higher here than in other areas. In fact, we should be surprised if the local price isn’t higher than in other areas.

Monticello has 2,000 residents and an estimated 3,000 vehicles a day pass through town, according to the Utah Department of Transportation.

While Blanding’s population is higher, the traffic count is less than in Monticello.

Other areas of the county have even less population and fewer cars on the road. However, despite the realities of our small population and traffic counts, a quick survey of gas prices in San Juan County over the weekend showed prices ranging from $2.95 to $3.28 per gallon.

While that is higher than anyone wants to pay, it is not nearly as far out of the expected range as many would have you think.

Moab has twice the population and more than twice the traffic of Monticello. I imagine it was four times larger than Monticello over the Easter weekend.

The population in Cortez is roughly four times larger than the population of Monticello. In addition, Cortez is a regional shopping area, so many people from surrounding community’s travel and shop in Cortez. The Colorado Department of Transportation shows that more than 12,000 vehicles a day pass through Cortez.

I traveled more than 900 miles over the past weekend during a quick trip to the Phoenix area. Gas prices in Arizona range from $2.84 to $3.15 per gallon.

I’m not sure what is happening in Colorado, but GasPrices.com reports that the average price of gasoline in Colorado is $2.69 a gallon; the sixth lowest state in the union. Enjoy it while you can.

Here in the adjacent state of Utah, the average gasoline price is $2.96 a gallon, higher than all but six other states.

GasPrices.com reports that prices on the Wasatch Front range from $2.79 to $3.19 a gallon.

The highest advertised gas price in Mesquite, NV was $3.29 a gallon on April 5.

Beaver, UT is in an interesting location, half way between Las Vegas and Salt Lake City. As a result, the small town sells an enormous amount of gasoline and much of it is sold from the host of gas stations along the two I-15 freeway exits.

Beaver has twice the population and five times the traffic count of Monticello. Prices in Beaver this week range from $3.19 on the interstate to $3.09 in town.

I have come to the realization that while all of us may complain about gas prices, when it comes time to buy gas, a host of additional factors help make our decision.

Of course, this includes the price, but also includes if the station is clean and well lit, if it has good food and clean bathrooms, if the staff is friendly and helpful, if the pumps offer easy access and accept a range of payment options. Some look for brand name fuel or simply for a location that is open when we need to buy.

Some would rather purchase gasoline from a neighbor than from a stranger. Local equity means sponsorship of little league teams, the purchase of Jr Livestock animals, dedicated Sunday School teachers, and friends for our children.

We live in an economy that embraces a Free Market, where a number of providers are free to offer a product and the competitive interchange helps set a price. There is no monopoly for gas in San Juan County. There are a number of providers and a range of price points.

Of course, a free market means that sellers are free to set a price and buyers are free to purchase wherever they want. Many local residents travel out of the area and can fill up in other locations, if that is their desire.

There is nothing un-American or illegal or immoral or unethical or wrong or greedy about going into business and offering a product for a price. In fact, it is the essence of free enterprise. It is the personification of the American dream.

In addition, there is nothing wrong with opening a new business. In fact, it is the essence of free enterprise. It is the personification of the American dream. It is also extremely risky, expensive and difficult.

Gas businesses make an enormous investment to install underground tanks, pumps and a canopy. The tanks come with a huge legal liability, as many failed distributors can tell you. Doing business in a rural area and slow economy is difficult, with a seemingly ever-increasing regulatory burden and the day-to-day stress of meeting a payroll.

While talk is cheap, I admire those who actually make the investment and take the risks. I wish them all the best of luck.
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