Gas Prices-Why in Mainland Dropping -but Still Going Up On St Croix
I know I passed Economics 1 and 2 in college, and understand the SUPPLY and DEMAND curve, and understand the cost of shipping goods is more expensive when you have to ship by sea and then truck to stations. What am I missing, why is the prices still going up on St Croix for gas, and why can I buy HESS gasoline cheaper in RI (3.75 a gallon, when the state tax and federal tax is almost .50 higher than gas tax in St Croix).
BELOW IS AN ARTICLE FROM LOCAL PAPER IN RI
Gasoline prices shot up fast enough over the past three months, but they sure are taking their time falling.
As analysts predicted with oil prices dropping in recent weeks, gas prices are on the downswing and experts expect them to decrease from the $4 level to $3.50 a gallon as early as June.
However, prices in Massachusetts dropped by an average of just a penny the past week. It marks the first decrease in seven weeks, though.
AAA Southern New England found in their weekly survey Monday a gallon of self-serve, regular selling for an average of $3.93.
That's 2 cents below the national average but $1.07 more than at the same time last year in the Bay State. Regular had been going for $3.11 in mid-February before escalating just about every week - often in double digits. Prices finally began stabilizing last week, with no increase from the week before.
MassachusettsGasPrices.com found regular had fallen about 2 cents from last week, averaging $3.96 per gallon.
In Rhode Island, gas prices dropped for the first time in eight weeks, with regular down 2 cents to average $4.03 per gallon.
Oil prices in recent weeks showed the largest weekly decline in 2 1/2 years as investors were worried about rising oil supplies and falling gasoline demand in the United States - due to steep prices and the struggling economy.
Many U.S. refineries also are expected to boost gasoline production after a series of unplanned shutdowns stemming from power failures and other problems.
Oil prices have tumbled from $114 a barrel at the start of May to less than $100 in recent days. Monday they fell $2.28 to settle at $97.37 as worries eased about Mississippi River flooding disrupting refineries and slowing demand. Oil prices had climbed more than 25 percent from Jan. 1 through April, partly due to unrest overseas and rising demand in improving economies.
AAA found in Massachusetts regular gasoline as low as $3.77 and as high as $4.15 - a 38 cent range. Midgrade is averaging $4.07, from $3.99 to $4.25. Premium is averaging $4.18, from $4.09 to $4.39. Diesel is averaging $4.17.
Find the most up-to-date local gas prices with the AAA Fuel Finder by logging onto AAA.com and clicking on Gas Saving Tips
Here are a couple of ideas on why things (including gas) are more expensive in the VI. Excise tax on everything that comes in for resale (2% to 25%). Gross receipts tax every time someone sells something (just went up from 4% to 4.5%) And then of course there are those hidden costs of government gone wild with suits against Hovensa for labor reasons, for environmental reasons...
Prices are 'stickier' in the USVI because if I recall correctly Hovensa can only changes its rack rate once/month. You'll see a decrease at the beginning of next month I believe. But if history holds true, don't expect it to be reflected penny for penny at the pump. Local retailers make a KILLING on gas. On the mainland retailers make a few cents per gallon but I calculated more than 20 cents/gallon on STX last year. Yes, volumes are lower compared to mainland and costs higher but I think a lot of the complaints are due to retailers and free market economy issues.
I recall reading an article in the Avis a few weeks ago, and the gist of the article was that rates would be adjusted WEEKLY. I cannot find the article, nor can I remember if those were Hovensa's rack rates, or the wholesaler's rates, or the gas stations. I actually called Licensing + Consumer Affairs and they told me that it was rack rates that should be adjusted weekly, but that Hovensa could do whatever they wanted and it wasn't up to LCA to regulate them.
Does anyone remember reading that article???
Yes , the article was in VI Daily News a week ago about Hovensa adjusting the rack rates weekly. Latest rack rate for regular unleaded that has been published in VI Daily News is $3.56/gallon (includes $.07/gallon tax). That was effective 5/10/11. The article further stated Hovensa would adjust rack rate again on 5/17. So who knows what Hovensa did today 5/17 --could have gone up or gone down with rack rates. Crude Oil on NYMEX is below $97/barrel today. Due to Hovensa's questionable refinery costs and independent station owners antics, we can only bend over & hold on while they "screw us some more".
That's the truth, Jumbie! I just wonder why the hell the article was even published if rates are not being adjusted. With crude down as low as it's been for over a week (relative to the $115 per barrel when they last raised rates) why the hell haven't they lowered the rack rate? Yep, bend over!!!!!
Thanks for all the information exchange. Just to let everyone know, I worked 10 years for Cumberland Farms/Gulf in the Northeast who owned over 750 convenience stores/gas stations. Working as an accountant, at the end of the year the average per gallon made was .14 cent a GALLON---AND yes some of the low profit was competition driven.
I say this---BUT THANK THOSE stations who give a 10% discount to seniors, veterans, firefighters, teachers..... and gas is at 4.14 a gallon, I got almost .40 cent per gallon and as a veteran I appreciate the vendors generosity, however, if two vendors can give discounts to veterans, seniors, teachers---that amount to .40 cent off a gallon, all other vendors MUST be making AT least the .40 cents and probably another .25 cents.
Whereas, HOVENSA did state the RACK RATE would change weekly---why has the rack rate been---and why is the DAILY NEWS and AVIS not printing the rack rate weekly now.
We all know, gas doesn't go down as fast as it goes up due to price change---
In closing, if you are taking advantage of the 10% discount at ROADRUNNERS and Sharumas----make sure you THANK them when you pay and tell them how much you appreciate the discount.
How 'bout price fixing among local retailers?
How about some price fixing by the consumers!
Yesterday, May 17 2011, I paid $3.95 at Royal gas station at Sunny Isle. (Stx)
Right around the corner, the station across from KFC that touts "inexpensive" gas was selling it for $4.14 ...and there was a car at each pump the three times I passed that way yesterday.
When demand goes down both for crude and for stations that overprice their gas, so will the price at the pump.
We should post prices here so that everyone knows where the cheapest gas is.
There's a gas station on Centerline road (don't remember the name), when you come from west airport road and take the road past Cruzan Rum to Centerline road it's right there. Last week they seemed to have the cheapest price I'd seen, but I don't know how high they raised the price this week. I'll try to remember to post the price later today.
I still want to know why gas prices went UP this week when crude has been DOWN for a couple of weeks now.
$3.99 regular /$4.15 premium - at the gas station on Centerline road (forgot to note the name), when you come from west airport road and take the road past Cruzan Rum to Centerline road it's right there in front of you.
Yesterday I saw $4.09 regular/$4.29(!!!) premium at Gateway in Peter's Rest
I find it hard to believe that local purchases have been cut back enough to warrant the price hike.
Just saw the invoice for gas at a station owned by a friend in Frederiksted that was delivered today.
He was complaining that they are losing $0.20/gallon at the 3.99 price while waiting for approval to raise the sales price!
Hovensa Invoiced @ $3.57/gallon including all governement taxes and fees +$ 0.07/gallon delivery fee = $3.64 or $0.35/gall gross profit when selling for 3.99 at the pumps.
Jeff, you read it right, how do you lose .20 a gallon when you have a .35 gallon profit per gallon THE DEALER TOLD HIS FRIEND.
As stated previously, I worked for a major convenience store as an accountant and maintenance manager, and find it highly unlikely the cost of operating a gas station on St Croix is higher than in the states. Heres some examples:
Rent---do you think rent is more expensive in VI than say a store in state of MA or RI. I say no
Labor-I think labor is more expensive in VI, but not much. As most gas stations have 1 full time employee with benefits in both VI and stateside, and than the rest labor is probably just above the minimum.
Maintenance On Building/Pumps. Look up next time you pump your gas in VI, see any fire suppressor systems. In states fire suppressor systems require regular maintenance contract and at least 2 inpections per years---cost was around $2500 per station in 2008 in RI and MA. Cant see the cost in VI higher, as it appears fire suppresor systems dont exist.
Pump maintenance, I would say about even, although the pumps are OLD in VI, the parts are simple to replace by anyone with excellant mechanical skills. Unlike pumps in states that have pay at pump options, etc....pumps in VI old and less complicated.
Testing and licensing. I would say equal, as in the states you have federal, state, and local requirements.
Taxes. I would say cheaper in VI. The average state taxes on fuel in states is 28.4 cent. and making the average state and federal tax .48 PER GALLON ----SEE BELOW THE ARTICLE WHICH SUPPORTS THIS NUMBER, AND IF YOU DONT BELIEVE, NEXT TIME YOU TALK TO FAMILY OR FRIEND IN STATES, ASK THEM TO CHECK THE AMOUNT OF TAXES LISTED ON THE PRICE OF FUEL AT THE PUMP WHEN HE OR SHE FUELS UP NEXT TIME IN STATES-----IN VI ITS .07 CENT
VI zero, except you must factor in the businesses VI gross sales tax which is almost 5%, which say would be .05 cent per gallon. However, on pumps in VI it does list a tax of .07 tax.
Federal+state+VI tax+VI GROSS SALES TAX = TAX PAID AT PUMP BY THE CONSUMER
ON MAINLAND FEDERAL PLUS STATE = .48 GROSS SALES TAX = ZERO* TOTAL .48 PLUS 0 = .48 CENT PER GAL
*NO GROSS SALES TAX ON MAINLAND, AS THE STATES TAXES NEGATE THIS AND WHEN CALCULATING FINANCIAL STATEMENTS YOU BACK OUT SALES OF GASOLINE NUMBERS, IE THE SAME YOU DO FOR CIGARETTES
VI FEDERAL PLUS STATE= .07 GROSS SALES TAX=.05 TOTAL TAX .07 PLUS .05=.12 CENT PER GAL
.48 COMPARED TO .12 EQUALS .36 LESS IN VI WE SHOULD BE PAYING PER GAL
AND LESS TRANSPORTATION COST FOR FUEL IN VI
BOTTOM LINE AFTER LENGHTY POSTING AND NUMBERS-----WE HERE IN VI ARE GETTING SCREWED BY SOMEONE... HOVENSA, GAS STATIONS, MIDDLE MEN DELIVERING THE FUEL---SOMEONE IS MAKING BIG $$$$$$$$$$ PER GALLON
".....Fuel taxes in the United StatesFrom Wikipedia, the free encyclopediaJump to: navigation, search
The United States federal excise tax on gasoline, as of February 2011, is 18.4¢/gal and 24.4¢/gal for diesel fuel. In January 2011, motor gasoline taxes averaged 48.1¢/gal and diesel fuel taxes averaged 53.1¢/gal, which accounted for 14% of the price of gasoline and 15% of the price of diesel.
As of July 2009, the average state gasoline tax in the United States is 28.6¢/gal, plus 18.4¢/gal federal tax making the total 47¢/gal . For diesel, the average state tax is 27¢/gal plus an additional 24.4¢/gal federal tax making the total 51.4¢/gal....."
How about Workman's Compensation Insurance, Liability insurance, Fire Insurance, Hurricane Insurance, License fees, Inspection fees and various trade fees. Don't forget the WAPA BILL!( Credit Card fees percentage of charge). Unemployment insurance, Social Security Employer contribution, accounting fees*-)
All of those fees apply in the Upper 48 (except the WAPA price) where gas averages $3.90/gallon and is headed down.
along with state and local taxes, plus state corporate etc taxes, all of which the stations in the VI don't have to pay...and electric in the northeast US is pretty costly as well. We paid 4.05 in NY yesterday...which has 55 cents/gal in taxes as compared to the VI's 7 cents.. And yes, there are economies of scale, which might make a busier station somewhat more economical to run, but I doubt if it would make more than a couple cents difference.. my opinion...the stations in stx are making a killing
And, I've heard station owners in stx comment on how very profitable the little convenience store attached to the station is, ...wonder what runs the Wapa bill up...the gas pump or the refrigeration, freezers, A/C in the store???
The rate of Electric in the Northeast is no where near what WAPA Charges! Get a quote for Hurricane insurance. I don't own a service station and I wouldn't want to own a service station. I have not seen or heard one bit of real information in this thread to make a judgement call on the profits.
I stopped at Lower Love (now Roadrunner) next to Avis building, today for gas. After showing my senior card to get my 10% off the $4.149 the person informed me they were going to stop giving 10% discount & only give 5%. Reason was they had "heard" the next load of gasoline from the refinery was going to be higher price and they couldn't afford to keep giving 10%. Well I got my $33 of gas for $30 after a short exchange of words.
What the heck has happened to the weekly adjustment promised to rack rates by Hovensa as stated in 5/10/11 VI News article?. I gues they are slow to adjust down but faster than greased lightning to go up. Price of crude on NYSE in $97/barrel range most of this past week. This whole thing reminds me of the empty promises put out by most politicians. Next gas up will go back to Shauma in Sunny Isle & see what they say.
Yes, sadly Road Runner went to 5% this week.
The one factor I know of impacting a % discount for gas a vendor charging is the final cost per gallon the vendor charges and the amount of customers using the credit card to charge the gas. .
The average in the states for gas sales on credit card was 70% a few years ago.
When you sell gas for say 3.00 gallon, and someone charges it, you pay an average of 2% to the credit card company. 2% of $3.00 is .06 cent.
When you sell a gallon of gas for $4.00, 2% is .08. Someone has to lose .02 gallon in profit.
I still take the 5% discount for veterans----rather have 10%, but 5% discount helps to feel I am not getting completely SCREWED when I go get gas---just feel mostly SCREWED by someone reaping $$$$$$$$$$$$$