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Why high gas price in Utah Valley?

The fact that falling gas prices along the Wasatch Front haven't spilled into Utah Valley begs a simple query: Why?

"It's a good and a valid question," said Lee Peacock, executive director of the Utah Petroleum Association.Unleaded regular gasoline is selling for an average of $1.23 a gallon in Provo - 9 cents more than the average price in Salt Lake City and 20 cents more than in Ogden. Prices have steadily fallen in the Salt Lake area since October, and several observers predict they will remain fairly low until summer.

But is there a good and a valid answer for the wide disparity between communities? Peacock and a gasoline retailer have a couple of explanations, although consumers might not like what they have to say.

A federal mandate to use oxygenated fuel from Nov. 1 to Feb. 28 drives the price up 5 cents to 10 cents a gallon in Utah County, Peacock said. The U.S. Environmental Protection Agency requires the county to use the special gas to curb carbon monoxide pollution from automobiles.

A recent Deseret News poll found that about a quarter of Utah County residents purposefully fill up outside the county during the "oxyfuel" season.

Refineries deliver the oxygenated gasoline to retailers at a higher price, prompting them to pass the increase on to motorists. The petroleum industry doesn't like the program because of the additional cost to blend the special fuel, he said.

Gas prices, though, largely depend on local market conditions.

"As long as people keep buying gasoline at a certain price, a retailer sees no reason to lower the cost," Peacock said.

Mark Walker, vice president of Pleasant Grove-based Walker Oil Co., said his company sets prices based on the competition. Prices not only vary from county to county or city to city but from neighborhood to neighborhood.

"Actually, it's just based on what the market will or will not do," he said. "This market has been slow to move for whatever reason."

Just because prices are higher in Utah Valley than in Salt Lake Valley doesn't mean station owners are gouging customers, Walker said. More often than not, he said, retailers are selling gas at or below cost.

"What's a fair return on an investment?" he asked, adding he'd love to see the governor set a 10 percent minimum profit margin. Wal-ker said making money by selling isn't as easy as it appears. Gas stations, especially family-owned enterprises, can't survive on gasoline sales alone.

"We're trying to find other ways to make money," he said. Walker Oil has teamed up with Taco Bell, Subway and Wendy's to supplement its income. Almost every gas station these days is coupled with a convenience store.

Both Peacock and Walker agree that prices will eventually tumble in Utah County following a nationwide trend that was initially slow to hit the Salt Lake area. Peacock said a retailer in Utah County will drop prices at some point to attract a competitor's customers. And others would likely follow.