Unconscionable gas prices
I have spent my career analyzing and explaining the oil market. I have testified in support of mergers. I have testified as to the causes of price increases. I have written academic books on the subject. I am a member of the National Petroleum Council, an organization created by President Truman more than 50 years ago to tap the nation’s leaders in the energy sector. I think I know a little about the oil industry. However, I cannot explain the high price of gasoline in Aspen or the upper Roaring Fork Valley. The prices are exorbitant. One might even characterize actions of the dealers setting the prices as “war profiteering.”
Let me explain that the prices charged at the Conoco and Shell stations in Aspen are not set by Conoco and Shell. Instead, they are set by the owner of the station. Often in the past I have told my friends and neighbors that prices were set not by the oil companies but by the station operators. Conoco and Shell are prohibited by law from telling the owners of Aspen stations what to charge.
However, Shell and Conoco can do something. They can cancel their franchise agreements with the Aspen owner, putting them out of business. Every agreement with a dealer or franchisee permits the company to terminate a contract if the dealer or franchisee acts in a way to damage the company’s image. The oil companies care about their image as do other dealers. Just this week I spoke to the BP Branded dealers organization. The members explain that they have invested substantial sums in their convenience stores and facilities. They do not want one bad apple undermining the brand image.
The operators of stations in and around Aspen are the bad apples in the view of other dealers. They are undermining the image of Conoco and Shell by charging more than $4 per gallon for regular when regular gasoline costs $2.70 in Denver. In other parts of the country dealers have been terminated for charging unconscionable or excessively high prices. I would hope that Shell and Conoco would do the same to those charging high prices here unless the Aspen gasoline retailers bring their prices back in line with prices in other parts of Colorado. (Obviously, Aspen prices will be higher than Denver due to the cost of trucking gasoline to Aspen.)
Those who want to accelerate the adjustment can help by contacting the marketing departments of Conoco/Phillips and Shell. The individuals responsible for branded marketers in the respective companies will react to public pressure. They care about their company’s brand image even if the operators of Aspen stations do not.
Philip K. Verleger Jr.
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