Letter: Aspen gasoline gouge costs a family of four $2,000 a year
November 25, 2015
GasBuddy reports that Mark Hunt is charging $3.54 per gallon at his Conoco station on Main Street. The price would be $2.32 per gallon if historical pricing relationships held. The gouge is $500 per person.
In the past, gasoline in Aspen would sell for 30 cents more than at the Glenwood Sinclair station, which has almost always offered the lowest price of gasoline around. Today, the Sinclair station is charging $2.07 and making a good margin because the cost of supplying the Glenwood station is around $1.65.
Is Hunt pocketing $1.88 a gallon (the difference between $3.54 and $1.66)? Almost certainly not. If he were, he would not be in a rush to tear the station down. I guess he is paying between $3.24 and $3.34 per gallon. The rest of the difference, roughly $1.50 per gallon, is going to the firm supplying the Conoco stations, possibly Thomas Pilot Logistics.
Unfortunately, Hunt probably cannot tell us what he is paying. I have testified in federal court on gasoline pricing for several large companies, including Shell. I have read the contracts, which always prohibit the retailer from disclosing the price paid. I also have consulted to the Federal Trade Commission.
Historically the large, integrated companies such as Phillips, Shell and Conoco used a system of zone pricing to affect the prices charged by their dealers. In doing this, the representatives setting the price worried about the reputation of the firm. The current suppliers, such as Pilot Thomas Logistics, which owns Western Petroleum LLC, have no such concerns. They are privately held and do not give a damn about reputation. They are happy to gouge you.
Aspen could solve the problem as one town in Kentucky did. It could build a town-owned station at the old lumberyard on Highway 82. The station could be city-operated or leased to a firm that agreed to specific pricing programs. This would seem to be a better use of city money today than installing a single electric recharging station for $60,000. The town might even earn a return.
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Hunt and the other dealers in the valley would benefit from such an action, as well, because the gougers would cut their prices immediately. Volumes would rise. I work with many suppliers who are happy to earn a margin of 20 cents, not $1.50.
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