Gas prices here among lowest in Alaska

By Jessica Edwards

In an apparent reversal of trends from recent years, gas prices in Haines have been among the lowest in the state during the past month.

On Monday, drivers in Haines could purchase regular unleaded gasoline for $4.42, about 23 cents lower than the average price of gas in the state, $4.64. The national average Tuesday was $4.11, and the Anchorage Daily News reported the average price in Anchorage was $4.42.

As recently as January 2006, CVN reported gas prices in Haines were about 82 cents higher than the national average and 10 to 20 cents higher than even smaller communities in Southeast Alaska with only one filling station.

Bigfoot Auto Service Station Monday was selling regular unleaded for $4.41 a gallon and Delta Western Main Street full service Tesoro station for $4.51, while prices at stations surveyed in Juneau ranged from $4.56 to $4.85. Gas was $4.65 at the 10th Street Tesoro.

Big box retailers like Safeway and Fred Meyer, which tend to undercut gas prices at other stations nationwide by 10 to 20 cents, would not provide gas prices over the phone at their Juneau stores, but prices were rumored to be $4.45 last week.

At stations surveyed region-wide, regular unleaded cost $4.82 in Skagway, $4.69 in Petersburg, $4.94 in Gustavus, and $5.07 in Wrangell.

The consumer-generated gas price monitoring website Alaskagasprices.com Monday listed gas in Fairbanks as some of the state’s cheapest, at $4.44 a gallon. Prices in Bethel and Kotzebue ranged from $6.05 to $7.25.

Bigfoot owner Paul Nelson said he was surprised to hear his prices were so low. "I wasn’t aware of that."

Local Delta Western manager Fred Gray said he had no explanation for the relatively low prices in Haines, but said in such a volatile market, local customers couldn’t depend on the trend to continue.

He named transportation and supplier fuel replacement costs, local taxes, competition from nearby stations, a station’s desired profit margin, and labor and utility costs as variables causing prices at the pump to vary and fluctuate.

The region’s three large gasoline suppliers – Delta Western, Petro Marine, and Taku – replace fuel supplies at differing intervals, and replacement costs go up with the increased price of crude.

Although Juneau stations generally can afford a lower profit margin because they move as much as 15 times more volume, Gray said, even stations buying from the same supplier at the same time might decide on different profit margins depending on business costs and pricing at other stations in the neighborhood.

Gas prices down the street might partially explain the difference between $4.65 gas at the Tesoro in Juneau and the local price of $4.51.

A station determines a workable profit margin, ranging from 8 and 30 cents per gallon, depending on overhead and competition, Gray said. Service stations with convenience stores were able to price gas lower because they made most of their profits on chips and sodas.

"Margins are ugly right now on gas," Gray said.

Nelson concurred that margins were low. He was able to price gas lower than the Tesoro station because he didn’t offer full service, and said he has worked to keep prices low for the 20 years he’s been a gas station. "We’re doing what we can to provide competition."

Consumers might infer higher prices at the pump mean higher profits for the station. But as national news media such as NPR have reported, many independently owned stations are struggling to make ends meet.

Gray said that’s because the price of gas wasn’t keeping up with the price of crude oil, which had more than doubled in the past year, from about $68 a barrel in June of 2007 to more than $140 last week.

The cost of crude oil comprises about 75 percent of the cost of retail gasoline, according to the U.S. Energy Information Administration. Compared to the 50 percent increase in crude prices, the agency said average national gas prices from June 24, 2007 to June 25, 2008 had risen from $2.98 to $4.07, an increase of only one-third.

Gasoline prices in Alaska have typically been higher than in the Lower 48 states, and that margin has increased since 2006 from 12 cents to 54 cents.

Average prices in Alaska are $4.64, compared to $4.34 in Washington and $4.26 in Oregon.

But the rate of increase has been lower in Haines than the national average. The cost of gas in Haines has risen $1.42 since 2006, while the national average has risen $1.87.

Calling prices "low" in Haines is true in comparison to prices statewide. "Gas prices aren’t low. They’re astronomical," Gray said.

He said he didn’t see any end in sight. "Unless crude comes down to $100, we won’t see a significant drop in prices. There’s nothing pointing to blue sky on the horizon."