Juneau drivers may see lower prices at the pump

National group says factors may push prices up this fall

Posted: Thursday, July 20, 2000

Gasoline costs about a quarter more a gallon at Juneau's pumps than is the national average. Predictions about any forthcoming relief are like the gas prices themselves -- all over the place.

Juneau drivers might see lower pump prices by mid-August, said Taku Oil Sales Manager Jeff Hansen, based on his reading of the trade magazines.

But AAA, a motoring and travel service club, cautions that demand for home heating oil this fall will probably curtail gasoline production enough to push gasoline prices higher after Labor Day.

``After a minor dip at the pump last month, fuel prices are once again on the rise in Alaska,'' AAA Alaska said Wednesday. After dropping almost a cent in June, prices increased in July 5.86 cents, bringing the average price for self-serve regular unleaded to $1.675 per gallon, the group said.

Nationally, during the same period, prices dipped by about the same amount.

Explanations vary about Alaska's high gas prices. Depending on who you talk to, it could be greed, or the vagaries of cost structure surrounding barging of the precious fluid from Seattle, or the OPEC-production-induced high cost of crude, or increased competition in Juneau from large-volume gas retailer Williams Companies, Inc.

AAA laid overall pressure on fuel prices at the door of OPEC's production restrictions and the resulting crude oil prices of more than $30 a barrel.

``Ironically, Juneau may be the victim of Alaska's success in getting its oil exported to Japan,'' said Alaska Public Interest Research Group co-executive director Jim Sykes.

This has tightened supplies on the West Coast, he said.

Shipping gasoline from Seattle to Juneau by barge is a barrier to wholesalers who might otherwise react to Seattle refiners' daily fluctuating price quotations, said Hansen of Taku Oil Sales.

``It's why things are so different down south,'' he said.

``And we never hear about when prices go down, only about when they go up,'' he added.

The cost of transporting gasoline from Seattle to Alaska is about 7 cents a gallon, said Alaska Attorney General Bruce Botelho in a brief supporting his investigation into high gasoline prices in Alaska last year. But gasoline prices in Alaska are routinely 25 cents to 30 cents per gallon higher than in Washington state, he said.

``Transportation is not the reason for high pump prices in Alaska,'' he wrote.

In the same brief, Botelho cited labor costs -- hourly earnings in manufacturing -- in Alaska as $4 less per hour than in Washington; an Alaska gasoline tax that is 40 percent lower than Washington's; and an Alaska gas retailers' gross margin that is 200 percent to 300 percent the national average.

``A gas station down south does work on a lot lower margin,'' Taku Oil's Hansen said. ``But there are stations Outside doing maybe half-a-million gallons a month. A lot of stations here are doing only 30,000 to 40,000.''

Downtown Union 76 gas station head technician Greg Cole concurred with that figure. ``We used to do 65,000 to 70,000 before Mapco (now Williams) came in,'' he said. ``Now we do maybe 30,000 to 40,000.''

But to put things in context, Cole said, a byword of the 1970s was that ``a gallon of milk cost the same as a gallon of gas. And everybody knows what milk costs today.''

Receipts from gas sales just about cover the station's utility costs, Cole said. Any profits come from car repairs.

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