Commonwealth Journal

Local News

March 27, 2014

Mayor: City getting into gasoline business

Somerset — City officials may soon be throwing their hat into the gasoline business in an effort to combat what many are calling unfair fuel prices in Pulaski County.

During Monday’s Somerset City Council meeting, Mayor Eddie Girdler told councilors that a plan is in the works that may allow the city to sell gasoline to the public.

“I think we have come up with a plan that will be presented to the city council in the next 30 to 45 days regarding ... the sale of gasoline,” Girdler said during the meeting.

Girdler, who left early for another meeting, didn’t go into any detail, but when reached by phone on Thursday, he provided more details about a controversy that has angered city councilors and their constituents for years.

“City council has been asking for a plan to sell gas to the public,” said Girdler. “Or looking for alternatives to help lower the prices.”

Girdler said the city plans on utilizing the infrastructure it already has in order to step into the competitive ring and sell gas below the prices offered by gas stations in the county. Girdler said that after “extensive research” and “really a lot of planning,” they intend to use the city’s gas processing plant, located on Chappell Dairy Road, to sell gasoline to the public.

The plant is already equipped with pumps (at least eight of them) that allow employees with city vehicles such as ambulances and police cars to fill up on either gas or diesel. Girdler said the city also provides gasoline or diesel to local entities such as Somerset Independent Schools.

And the city already sells natural gas — a low-cost alternative fuel — to the public via the processing plant.

“We really worked up a very good plan to utilize an investment the city has already made,” said Girdler.  “ ... We don’t have to do any more investing.”

The move is a major one, coming after years of outcry from city officials and members of the public alike who claim that local gas providers set their prices significantly higher than providers in surrounding areas.

Concerns raised to such a fever pitch that a “meeting of the minds” was held in August 2013 with local gas station owner Charlie Patel, Micky Williams, one of the voices of a community group created to demand fair gas prices, Somerset Mayor Eddie Girdler and Pulaski County Judge-executive Barty Bullock.

Wiliams has since appeared in city council, and another attempt was recently made to hold a “gas summit” involving several local leaders. That meeting was canceled due to wintry weather.

Somerset City Councilor John Ricky Minton has long been one of the most vocal opponents of the perceived unfair gas prices.

On Thursday, Minton said he’d be “tickled to death” if the plan moves forward.

Time and again Minton and other councilors called on local gas retailers to explain how they set their prices.

Those requests were denied. Business owners have stated that to discuss their practices would constitute a violation of anti-trust laws.

Stefanie Griffith, with the public affairs department of Marathon Petroleum Corporation (which operates the Speedway gas stations and sells Marathon-brand gasoline to independent gas station providers as well) has stated in an email to a Commonwealth Journal reporter last year that a number of factors go into gas prices at the local, or “street” level.

Griffith said it begins in the stock market because gasoline is traded as a commodity.

“ ... These are commodities that are traded throughout the day by thousands of people around the world,” Griffith said. “To break it down even further, you can look at what the East Coast, Gulf Coast, West Coast, Chicago markets, etc. are trading at as these numbers are published continuously throughout the day. All of these markets are affected by numerous things such as supply and demand, industry operations, weather, political unrest in areas of the world and numerous other events. In addition to these issues that can impact supply and hence price, there are many factors that go into the price of a gallon of gasoline with the most significant being the price of crude oil followed by state and federal taxes, transportation, and refining.”

Gasoline prices are more obvious to the average consumer than other commodities because gas stations, many of them located just across the street from one another, display their prices for all to see.

City officials have said in the past they understand the national, international, and regional factors that affect prices. But they continue to point out that Somerset-area prices remain significantly higher than a majority of other gasoline providers in the state.

City councilors have also lamented that competition is nonexistent in Pulaski County — where a majority of gas retailers are located on U.S. 27 within a stretch of just a few miles.

“We have no competition in this town, true competition,” said Councilor Jim Rutherford in February. “Where people want to treat a customer right at a decent price ... These places are like ‘You know what, we’re okay where we are and we just won’t compete with each other.’”

Consumers and officials alike, frustrated with the difference in Somerset prices compared to other areas in the state, have been quick to point the finger at Somerset-based Cumberland Lake Shell.

Others have wondered whether Marathon, a major gas supplier in the state, is behind the alleged unfair practices.

But either way, no matter who changes prices first, councilors have been fed up with it.

“I’ve been fighting this for three years,” Minton said on Thursday.

Girdler said the city is in negotiations with the local Continental Refining Company to purchase gasoline — and Girdler pointed out that Somerset is the only “local entity, private or government” looking to buy locally.

“We want to retain and create new jobs,” said Girdler.

Girdler said the city plans on only offering low-grade gasoline to the public, and he said diesel won’t be made available to the public because many of the city’s vehicles, such as ambulances and fire trucks, run on the fuel. To open up that product to the public would “overburden” the city’s diesel supplies, Girdler said.

Girdler said the aim is not to take over private businesses, but to stir some competition in the area.

“Most companies, if they wanted to, could reduce their prices 5 to 10 cents,” said Girdler. “If they want to lower prices and keep them there, we will pull out.”

Girdler said there are still issues to be worked out — such as whether the city could keep up with a high demand should they enter the local market with significantly lower gas prices than other retailers.

“We’ve got to make sure we have the space and the supplies,” said Girdler.

Girdler emphasized that the plan still has yet to be presented to city council. The decision to move forward ultimately lies with the councilors.

Minton said he would “be for it 100 percent” once it goes before the council.

Girdler said he’s confident the city will be able to sell the low-grade gas at prices below local retailers’ prices.

“It’ll be significantly lower than the competition,” said Girdler, “Or we wouldn’t do it.”

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