Gas prices dramatically lower; still higher in Oshkosh than most of northern Valley
According to an article in today's Oshkosh Northwestern the American Automobile Association says Wisconsin’s average price of self-service regular gasoline is down more than 65 cents a gallon since setting a new all-time record high last month.
It's a relief to see the lower prices at the pump, but I still don't understand why Oshkosh service stations continue to be anywhere from 3- to 5-cents more per gallon than stations in Neenah, Menasha, Appleton, etc. Needless to say, since members of my household are in those communities on a regular basis, we patronize stations there and not in Oshkosh. I hear the same from a lot of people who commute to the northern part of the county for work or pleasure. It wouldn't necessarily make sense to drive there ONLY to get gas, but as long as one is driving there anyway, may as well shop at the stations that offer a beter price. You'd think Oshkosh stations would get the message that lower prices will bring you more customers. Or did they learn nothing from the "gas wars?"
It's a relief to see the lower prices at the pump, but I still don't understand why Oshkosh service stations continue to be anywhere from 3- to 5-cents more per gallon than stations in Neenah, Menasha, Appleton, etc. Needless to say, since members of my household are in those communities on a regular basis, we patronize stations there and not in Oshkosh. I hear the same from a lot of people who commute to the northern part of the county for work or pleasure. It wouldn't necessarily make sense to drive there ONLY to get gas, but as long as one is driving there anyway, may as well shop at the stations that offer a beter price. You'd think Oshkosh stations would get the message that lower prices will bring you more customers. Or did they learn nothing from the "gas wars?"
posted by Cheryl Hentz at 2:10 PM
1 Comments:
Authored by: DBCooper on Monday, September 18 2006 @ 06:18 PM MDT
The Northwestern attempted a story on this the other day (the reason for price difference). They got the minimum markup percentage incorrect, said it was 6.18% when in fact it is 9.18%. So, typical for the Northwestern, you're never sure what to believe and what not to believe.
That article, other articles and news stories lately, and there was even something on this site a week or so ago(?) have covered the various aspects of profits, relative monopolies, supply and demand, freight costs, etc. Some have even touched on the minimum markup law. These all do have an effect, but I don't believe it is the major impact.
What I'm about to write is NOT the be all/end all answer to higher gas prices in Oshkosh. The only people who can really explain it to you are attorneys for the oil companies, or attorneys for the state. None of them are about to explain it to you, because then you'll start asking "why?". That's bad for the oil companies, which in turn means it bad for politicians. NO, this is not DB's personal conspiracy theory, I'm showing you links to information to back up some of it.
The reason Oshkosh pays more for gasoline is simple: It has to do with the states minimum markup law.
The minimum markup law for gasoline is covered under Wisconsin State Statute 100.30
You can search for 100.30 here, and then download the entire 100. statute and look through it:
http://www.legis.state.wi.us/rsb/stats.html
In most all stated scenarios in 100.30, the key verbage to look for is "or the average posted terminal
price at the terminal located closest to the retailer".
Gasoline at retail stations only comes from regional bulk gasoline terminals, with very few exceptions. (racing fuel being one of them). The gasoline travels underground in pipelines from the refineries to the gasoline terminals. It is then hauled from the terminal to the retail station by the semi tankers that you are familiar with, seeing them both at the station and on the highways.
In Wisconsin, there are bulk gasoline terminals in Junction City, Superior, Green Bay, Madison, Milwaukee, and the important thing to us in Oshkosh, there is a bulk gasoline terminal in Waupun. (There are most likely others, it doesn't matter what their location is for this discussion).
The gasoline at the terminal in Waupun is refined in Pine Bend, Minnesota (southeast of Minneapolis) from crude oil piped to it from Oklahoma/Texas and from Alberta, Canada. The refined gasoline then runs through hundreds of miles of pipeline underground in Wisconsin.
http://www.fhrfuels.com/refineries/wisconsin_pipeline.asp
Back to the minimum markup...
It does not matter if a station in Oshkosh gets it fuel trucked in from Green Bay, or from Waupun, or from Milwaukee. The verbage again from 100.30: "or the average posted terminal price at the terminal located closest to the retailer". The stations in Oshkosh must set their prices based on the price being charged in Waupun at the wholesale level, as Waupun is the nearest terminal.
Get your maps out and start measuring. Everybody likes to look at the prices in Neenah and ask "why". Again, simple answer, Neenah is closer to the terminal in Green Bay than it is to the terminal in Waupun. Neenah's prices are set by the terminal price in Green Bay, Oshkosh's prices are set by the terminal in Waupun.
Note that the above is a "condensed version". 100.30 is a very long statute, and there are certain times and certain competitive conditions where the terminal price does not apply. Most of the things stated in the article in the paper as reasons why the price is higher are ON TOP of the conditions set by 100.30
I'm not an attorney and I didn't stay at a Holiday Inn Express last night. Is there anybody reading this that can better interpret 100.30 for us? Is there anybody in the gasoline business reading this that can tell us if it is true or not? How about politicians? Any politicians reading this that give us an answer on why the minimum markup law is still in effect?
Just to jog your memories, for those of you who think the minimum markup is a good idea. Do you remember back in the 1960's, when Oshkosh had several of it's own gas terminals? I know there were 2 terminals on Harrison Street, at just about the intersection of Libbey Street. (One of them was a Sinclair? and it caught fire one night, impressive! The other was a Phillips 66?). I'm sure there were others. The gas came in by railroad car. That is more along the lines of what the minimum markup law was supposed to effect. If you were on the northside of town, you marked up according to the northside terminal. If you were on the southside, you marked up according to the south side terminal. NOT terminals 40 or 50 miles away. You used to see little terminals all over the rural landscape. The business landscape and business models changed, the laws didn't.
DBCooper
PS: Does anybody remember some other terminal sites in Oshkosh, just for trivias sake?
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