The vaunted leader of the Utah Petroleum Dealers Organization, Paul Ashton, again insults the intelligence of Utah drivers when he says that most people don't understand the "cutthroat nature of gasoline pricing and cyclical price changes."
He is reported to have made this comment to the Deseret News as justification for the 10- to 12-cent jump in pump prices in every service station simultaneously in recent days.He asserts that we motorists are just too dumb to read and understand the article that also appeared in the same Dec. 4 edition. Here we find that heating oil went up slightly, and crude rose a mere 80 cents a barrel, but January delivery of unleaded gasoline "went down 12 cents to settle at 41.49 cents a gallon after reaching a high of 41.90 and a low of 41.10." Now there's some real cyclical cutthroating for you.
According to the New York Merchantile Exchange, the price for January delivery will be 41.49 cents. That doesn't say, "Watch out, folks, the market will be on a cutthroat and cyclical rollercoaster in January." It says that prices should be pretty stable in January.
Ashton and his dealers know that for the month of January 1994, their price gouging monopoly has a stable price to work with.
Subtract from the pump price of $1.149 the federal and other taxes (38.9 cents per gallon that the consumer pays, not the industry) and the pump cost to the consumer (gasoline only) is 76 cents per gallon. The dealer paid around 42 cents per gallon (January delivery price). His profit would be roughly 34 cents per gallon, if the wholesaler puts the gas at his pump at the marketplace price (41.49 cents per gallon.) That, my friends, is about 80 percent over cost.
Where is all this "cyclical" pricing and ambiguity in the petroleum market we dumb motorists do not understand? And, as to the "supply and demand" smoke screen, there is a worldwide oil glut, and anyone literate enough to read the paper or watch CNN on the OPEC negotiations knows it.
The answer, plain and simple, is Utah oil deliverers have a cartel. Almost without exception, they raise prices with impunity and in cadence. Whenever there is a likelihood that people will be driving more, the price goes up.
Howard A. Matthews
Bountiful