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Why gas costs are much lower in some places than others
07:28 PM CST on Thursday, November 6, 2008
Falling prices at the gas pump are giving Metro New Orleans drivers a little relief, but those prices are all over the map, depending on where you are on the map.
"I live in Mandeville, but I was over here at the refinery and I saw it was $2.05,” said one local resident, who was filling up at a Chalmette convenience store, “I said, ‘I've got to stop because I have not seen it anywhere else.’"
On Veterans Blvd. at Transcontinental Dr. in Metairie, two gas stations across the street from each other are competing over the lower price. One is selling a gallon of regular unleaded for $2.19, while the one across the street advertises a price of $2.29 a gallon.
"Basically, you got over 3,000 individual gas stations in Louisiana, and of that 3,000, over 50 percent is individual, single-store dealers," said Kenny Retif, Owner of Retif Oil, and spokesman for the Louisiana Oil Marketers and Convenience Store Owners Association.
Retif said those individual dealers set their own gas prices that constantly depend on their wholesale gas costs.
"Just in three days, you're gonna see a market swing of about 23 cents per gallon. So, if they guy that you bought your gas from picked up a load on Monday, he basically has inventory at high prices and he's just gotta pass along that cost," said Retif.
At a Chalmette gas station on St. Bernard Hwy., a gallon of regular unleaded sold for $1.95 on Monday, but by Thursday it sold for $2.05.
Compare that to a New Orleans convenience store off Jefferson Davis Pkwy., that offered gas at $2.43 a gallon, nearly 40 cents higher.
"Different market speculation, the strength of the dollar, the stock market,” all reasons Retif said prices, both wholesale and retail are widely fluctuating, “So, I mean, these prices are varying so much. Just back a few months ago, you had crude at $147 a barrel, but right now, it's trading at $61 a barrel."
Plus, Retif admitted that some gas stations are likely keeping prices higher to make up for months when the wholesale prices were so high that it ate into store owners' profits.
"On average, a dealer only makes a penny and a half per gallon," he said.
According to AAA, the average price of a gallon of unleaded in the New Orleans Area was $2.27 Thursday, but last month, it was $3.53, more than a dollar more.
Last year at this time, they estimated the average price of a gallon of unleaded at $2.90.
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