Area drivers pay more for gas than Colorado average

Monday, Nov. 11, 2013 3:51 AM

Gasoline prices in Cortez have fallen sharply recently, but buyers are getting squeezed at the pumps.

On Main Street Tuesday, Nov. 5, the average price for regular gasoline was $3.39 a gallon, a decrease of 4 cents from the beginning of the week. The average price in Colorado was 16 cents less at $3.20.

"There are so many variables that go into gas prices," said Gary Hanson, Western Refining vice-president of corporate communications. "Prices depend on a number of different things, like location and suppliers, so we tend not to discuss them."

One of the Southwest's top oil refiners, El Paso-based Western Refining, collected more than $550 million in net income last year. It supplies gasoline to 200 convenience stores and gas stations in Arizona, Colorado, New Mexico and Texas, including Giant and City Markets in Cortez. Both stations guide the area's gasoline prices, according to one local fuel purveyor.

"I'm a small player in town," said Cordell Shumway, who operates the Conoco and Alon stations on Main Street. "I follow what Giant and City Market do."

David Fraley, of Fraley and Co., agreed, saying stations that move the most fuel set prices in the market.

"Collusion is illegal, so we're not meeting for coffee," he said. "We don't have to meet, because the prices are advertised on the street."

When gasoline prices are rising, Fraley said dealer profit margins are squeezed. He explained as fuel costs rise, dealers are incapable of quickly passing on those costs to consumers. In a falling market, he said its not uncommon for dealers to try to recapture lost margins, meaning pump costs take longer to decline.

"This is just one piece of the pricing puzzle, but it's a way for the mom-and-pop operations to stay in business," Fraley said.

Last week, crude oil prices dropped below $100 per barrel for the first time since early July. Industry analyst said Americans are saving more than $100 million per day in fuel costs compared with this time last year.

Fraley projects the market will continue to fall in the short term, citing lower demand in winter.

He said that means consumers could expect additional relief in coming weeks at the pump.

In May, average retail prices in Colorado for regular gasoline peaked for the year at $3.83 per gallon.

Fraley and Co. is largely a commercial fleet distributor, and has the current contract to supply fuel for Montezuma County. Montezuma-Cortez School District superintendent Alex Carter said the school is able to purchase gas at wholesale prices. On the most recent fuel delivery, the school was charged $3.07 for regular gas, he said.