Estimated read time: 3-4 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
SALT LAKE CITY (AP/KSL News) -- A report ordered by Gov. Jon Huntsman blames gas stations, not refineries, for "gouging" motorists with stubbornly high gasoline prices.
"Our report revealed that gas retailers are making a healthy profit off Utah consumers and continue to do so even as rack prices keep dropping," Huntsman's commerce chief, Francine Giani, said Friday. "While these business owners may not be breaking any Utah laws, they are certainly gouging fellow citizens at the pump."
Utah gasoline prices averaged $2.57 a gallon for unleaded on Thursday, compared with the national average of $2.25, Giani's report said.
That 32-cent disparity has remained constant since Sept. 11, she said.
"There's no question that we were getting hosed," Giani said.
While Giani blamed retailers, she couldn't get the gas stations or Utah's five refineries to reveal their profit margins for a definitive analysis.
"I can't say that I'm extremely surprised, but I am disappointed because I thought we would've gotten better cooperation," Giani said.
Chevron, Silver Eagle Refining, and Holly Corps Refining cooperated with other questions. Tesoro told investigators all its answers were on the company website. Big West Oil, which runs Flying J, didn't respond any of the state's questions.
Giani quizzed 24 randomly chosen gas station operators, but only four responded, all in rural Utah. They revealed their "rack" prices -- the stated price at bulk fuel terminals -- but Giani said none of the retailers disclosed routine discounts that lower the rack price.
"Gouging is not a nice thing to talk about, and it's not a nice thing to say about people, and so I've been very careful with how I've said it. But very clearly people are making money, and the information we didn't get, is maybe more telling than anything else we could do," Giani said.
"The retailers are an easy target," said John Hill, executive director of the Utah Petroleum Marketers & Retailers Association, which represents gasoline stations.
In an interview, he took exception to Giani's findings, while acknowledging gas stations have been pocketing more profits than usual.
"Last week I ran the numbers, and they made 15.6 cents (a gallon) in profit, which was a 6-percent profit -- not gouging," Hill said.
For much of the year, Utah gas prices were lower than the national average and retailers made only 6-8 cents a gallon, a normal profit rate, he said. Hill's group represents 80 gas station operators and distributors who deliver fuel.
The fuel distributors complicated Giani's efforts to determine what part of the supply chain was profiting most from gasoline sales in Utah.
Hill blamed refineries, saying their rack prices have been as much as 40 percent higher than the national average. Lee Peacock, president of the Utah Petroleum Association, which represents major oil companies, didn't immediately return a call Friday from The Associated Press.
Utah has an isolated gasoline market, buffeted from national forces than can lower prices. For the same reason, Utah's gas prices have often been lower than the national average.
But the state's strong economy is keeping gas prices high while prices elsewhere decline, and Giani's report says gasoline consumption in Utah has risen nearly 3 percent a year since 1990.
Giani warned that Utah gas prices could creep higher over the long term because Utah's refineries are operating at near capacity and no refinery is planning to expand production.
Also running at capacity are pipelines that bring crude oil from Canada, Wyoming and the Uinta basin to the North Salt Lake City refineries.
Adding to Utah's tight supplies, some of the refineries are exporting gasoline to Idaho and Washington, Giani said.
(Copyright 2006 by The Associated Press. All Rights Reserved.)
