Commonwealth Journal

August 3, 2013

Gas pricing is subject of community forum

Why do Pulaski Countains pay more for fuel than other communities?

by Heather Tomlinson
Commonwealth Journal

Somerset — A meeting of the minds took place in July as local community leaders worked to uncover the reason behind what they’re saying are unfair gas prices in the county.

On July 23, Somerset Mayor Eddie Girdler, Somerset City Councilors Donna Hunley and John Ricky Minton, Pulaski County Judge-executive Barty Bullock and Pulaski County Community Development Director Tiffany Bourne met with Mickey Williams and local gas station owner Charlie Patel in hopes of getting to the bottom of complaints of unfair gas prices in the area.

Williams has appeared before Somerset City Council several times recently as a representative of the Citizens United Advocacy Group (not to be confused with the Somerset-Pulaski County United group, which is exploring a possible merged city-county government). The main focus of the group is to get to the bottom of the alleged unfair gas prices, and force change.

“This is not a new thing, but it’s a thing that seems like it’s continually getting worse and it’s a thing we feel like has got to come to a stop,” said Williams during the July 23 meeting. “This is something that’s affecting everybody.”

The roughly hour-long discussion centered around gas suppliers who work with local businesses, including Cumberland Lake Shell and Southern Petroleum, and corporations such as Walmart and Kroger, which provide gas to the community as well.

Girdler said it appears that Somerset’s gas prices stay higher than surrounding communities because of a lack of competition between the local gas providers.

“Now, it doesn’t seem there’s a competitive atmosphere or mechanism existing,” Girdler said, who noted the city receives the “rack,” or wholesale gas prices, daily as part of their bulk fuel plant operations. “We know there is definitely gouging going on in Somerset ... we know what the prices are.”

The Kentucky Attorney General’s Office will not look into gouging accusations because price gouging can only be investigated when a natural disaster occurs. Only then can the attorney general’s office step in, as per state law.

Somerset City Attorney Carrie Wiese has suggested that citizens take the situation into their own hands and appeal to lawmakers themselves. Wiese has also said that the city can’t file a lawsuit on behalf of Somerset and Pulaski County residents. She said that would have to be done by the citizens.

“We just can’t understand from that point on how they make the decision to keep our prices higher than anybody else,” Girdler said during the July 23 meeting. “It’s because they can. That’s not good enough.”

Girdler said the city has saved itself hundreds of thousands of dollars just by operating its own bulk fuel plant and moving toward natural gas as an alternative fuel — sidestepping local gas providers completely.

“The competitive nature is gone, and there’s an agreement not to compete,” Girdler said. “In terms of free and open competition, there is none.”

City officials have long asked that local gas suppliers and providers step forward to discuss the complex gas pricing process. Their requests have been declined by business owners who say to discuss such an issue would violate anti-trust laws.

“They will not discuss prices with you,” said Girdler.

Girdler said he spoke once with a representative of the Speedway Corporation and was told the company simply “stays competitive” with other providers in the county. Minton said representatives from Murphy Oil  — the supplier to Walmart’s stations — stated in a past letter that they stayed “within five cents” of other gas providers in the area.

“We’d prefer the private sector to realize they can help our community by lowering prices and everyone comes out a winner,” Girdler said.

Patel, who operates two gas stations in the county, said he operated gas stations in Owensboro and in Liberty and did not experience the atmosphere that he does here.

Girdler said the city it toying with the idea of opening its own station to point out the discrepancy between the rack prices and the street prices. But he emphasized it would not be to “compete” with the private sector.

“We know we can’t compete with them, so its more of a public relations (thing), trying to impress upon them there are alternatives to their gasoline,” said Girdler.

A recent op-ed piece from Attorney General Jack Conway points to one possible reason for the huge disparity in state gas prices. The piece, which appeared in the Louisville Courier-Journal in July, points to the distribution network in northern Kentucky as one possible culprit.

“Our experts uncovered strong data to suggest that Marathon’s acquisition of Ashland Oil in the late 1990s negatively impacted competition in the wholesale gasoline market in Kentucky,” Conway stated in the op-ed. “In other words, our investigation indicated Marathon has a regional monopoly that allows it to manipulate gas prices at the wholesale level. Even after approving the merger in the 1990s, the Federal Trade Commission warned that of the nine states involved in the merger, one state bears watching — that was Kentucky.”

Conway also noted in the piece that Marathon is the dominant gas supplier to retailers across the state.

But Williams wants to know why gas prices are what they are at the local level, and not statewide.

“It makes me sick that it’s happening,” Williams said during the July 23 meeting. “We know there’s a problem, then we need to maybe see how we can work on it.”

Minton, who has voiced his frustration with the gas prices for several years now, has long pushed for action on the city’s part in lowering gas prices. During the July 23 meeting, he expressed discontent that more county officials hadn’t attended the meeting.

“I’m very disappointed in any of them not showing up at this meeting,” said Minton. “I feel very disappointed that they don’t feel like this is important enough for their people.”

Magistrates Glenn Maxey and Jason Turpen were dealing with illnesses in their families, and Minton said he understood emergencies — but he wondered why the other magistrates couldn’t attend.

“They’re put in by the people to represent the people ... there’s no reason why one or two of them could not have been here and stood up for the people of Pulaski County,” said Minton.

Williams asked that Girdler report back to city council during the Aug. 12 meeting that they are brainstorming ways to lower gas prices.

Girdler agreed.

“We’ve got a responsibility to our citizens to lower prices, to provide opportunities ... make sure our prices are at least competitive with the surrounding areas,” Girdler said. “That’s not too much to ask.”

A possible public demonstration was discussed, something Girdler said may evoke a response from the private sector.

“We are trying to find a way ... (we’re) making a real effort to do something,” said Williams.

The Commonwealth Journal is currently working to investigate this issue. Look for more on the situation in upcoming editions.