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Show Gas up 1 3 cents per gallon " " i i i Price gouging charged i By MARK EDD1NGTON Staff Writer BOUNTIFUL The 13-cent per gallon increase in gasoline prices last week at most local stations has led to Davis County consumers allegations of price gouging and price fixing. "It stinks," said Bountiful resident resi-dent Gary McCarry. 4 'I think they're all in cahoots. Someone is running some kind of show under the table. ' Most area gas retailers deny the charges leveled by McCarty and others, but at least two station owners, who are selling fuel for less than neighboring stations, admitted receiving phone calls from other retailers asking them to increase their price. Darrel Walton, owner of Darrel's Chevron in Bountiful, said he has had calls from at least one other retailer pressuring him to raise his price. "Others are not happy, but I need to do what I have to do to stay in business," he said. The retailer declined to reveal the identity of retailers who had contacted him. "It happens all the time, particularly par-ticularly in the last year or two," said a dealer in a neighboring city who spoke on the condition of anonymity. ano-nymity. The dealer said he was approached ap-proached by a number of owners last fall asking him to raise his prices "They would come up to me and say, 'We can't allow you to sell lower than us. We need to help each other out so we can all make money,' " the owner explained. "But they weren't too worried about when they could undersell me, so I figure turnabout is fair play, ' he added. Price-fixing allegations are investigated by the state Division of Consumer Protection. Protec-tion. The Utah Attorney General Office prosecutes the cases when there is sufficient evidence. The problem is in finding the proof, according to Art Strong, who heads the Attorney General Office Fair Business Enforcement Unit. Strong has investigated numerous nu-merous complaints but said getting the right people to come forward is a problem. Strong investigated price-fixing allegations last spring, I when stations across the Wasatch Front uniformly raised prices by 10 to 1 2 cents a gallon. "What we found," Strong said, "was there was a profit squeeze going go-ing on. Refinery or rack prices were ! going up and street prices were go- I ingdown." ! "Big companies with their own j refineries can afford it because they're making 15 to 20 cents at the refinery. It doesn't hurt them to lose a couple of cents at the pump, but neighborhood stations can 't do that," he explained, "Eventually, one retailer has to raise prices or go out of business. He raises prices and others rapidly SEE GAS ONA-3 Leaded ,BiyJlO I j IT-:-; nK I I Regular 1 fl R ts I I Sett Serve IU lU I I Unleaded 1 flK i I I SeH Serve Uv lU I I I Suiw Unleaded 1 1 1 I 1 I Self Serve 1 1 I M I j ' i. I ' 1 f 1 If Gas prices at this Texaco Station in downtown Bountiful show ' .how the costs went up overnight. On Tuesday the price of gaso-" gaso-" line was 93.9 cents per gallon and by Wednesday the price ' jumped to 1.05.9 at many stations throughout Davis County. The price hike took consumers by surprise this week as the price has been stable or dropping since the end of the war in the Persian Gulf. (Clipper photo by Patrick Mitchell) Another common tactic companies com-panies accused of below cost selling use, is the "meeting the competition competi-tion defense." This clause of the fuel act means only the first retailer to sell below cost is guilty of violating the law. Others can legally follow suit. "That's the biggest weakness in enforcing the act," Strong said. "In a large urban area with over a thousand thou-sand stations, it is an enormous problem to determine who sold below cost first." Strong said an interim committee is being formed to study problems in the state petroleum business. Besides below cost selling and price fixing, the committee will study price gouging. Currently, there is no state statute barring price gouging. As the debate continues as to the cause of the increase, gasoline prices continue to rise. Gas CONTINUED FROM A-1 follow suit," he added. Strong said, based on his information he has jeceived within the last 10 days, the same situation exists, which he said cpuld be the reason behind the gasoline gaso-line increases in Davis County. "If you are in business, the first chance you get to move prices up, you will," said Doug Wells, a wholesale marketing manager for flying J Inc. - Wells maintains it is not the refineries' fault for the rapid price fluctuations. He said the refineries are at the mercy of the New York Mercantile Exchange, a futures market for petroleum products. . The price has nothing to do with supply and demand, but is due to the speculation in petroleum futures, which Wells said is a sore spot for those in the industry. He also pointed to the increased amount of driving as an underlying reason for the increase. Whatever explanations are given, they fail to satisfy many Bountiful residents. "They can say whatever they want, but it's still collusion," Keith Kidd said. "They all work together. There isn't any real competition. com-petition. ' ' Another problem is below cost selling, a tactic Strong said big retail gas chains have historically used to drive smaller independents out of business. Walton, who leases his property from Chevron, said his rent is structured on the volume of gas pumped at his station. "The more gas I pump, the better my profit," he said. By raising his price, he said he would lose a lot of business from many of his customers, who commute com-mute to Salt Lake City. Gas prices in the capital have remained the same. The Chevron owner buys gasoline directly from the Chevron refinery. Many independent retailers cannot afford to sell lower, because their cost is higher. They buy their gasoline through jobbers, otherwise known as wholesalers, who in turn buy direct from the refineries. Lynn Harmon, owner of Harmon's Har-mon's Texaco in Bountiful, is one independent retailer who had to raise his prices. The owner said he can't afford to continue operating at a one to two percent profit. Harmon said there are too many retail chains in the refinery business, which allows them to undercut the competition com-petition and drive them out of business. busi-ness. The small independent gas station is becoming a thing of the past, he said. The Utah Motor Fuel Marketing Act forbids the sale of motorfuel at less than cost. Cost is defined to be invoice, freight, taxes and other charges tied directly to the price of gasoline; plus a reasonable amount for overhead, which in the absence of other evidence, is set at 6 percent. per-cent. Strong said this gives retailers the option of selling gasoline at cost, or a few tenths of a cent over cost if they can prove their overhead is substantially less. He said the state has already filed an action against Flying J Oil Refinery Inc. for below cost selling. The Woods Cross company's defense is that they sold below six percent because their overhead was below six percent. They denied six percent is the cost of doing business, busi-ness, Strong said. |
