Gas prices dropping

While gas prices have been going down in recent weeks, Pahrump residents still pay more than Las Vegans. The price difference is attributed to factors like transportation costs and smaller volume.

The lowest price for regular unleaded, self-serve gasoline in Las Vegas late last week was $1.43 per gallon at an Arco Station on Koval and Flamingo Road. In Pahrump the cheapest price late last week was at the Terrible's Country Store at Highway 160 and Calvada Boulevard, which cut its prices 4 cents per gallon July 18, to $1.61 per gallon for regular unleaded. However by last weekend, the Country Store on Leslie Road, dropped its price to $1.59 per gallon. Prices for that same grade of gas were selling at $1.65 per gallon up the street at the Horizon Market on Leslie and Bell Vista Road.

Jack Greco, chairman of the Nevada Gasoline Retailers Association, said it helps to compare similar gas station chains, for example comparing a Pahrump Texaco station with a Las Vegas Texaco, a Chevron with another Chevron, where the differences may not be as great.

"For the most part, Chevron's tank wagon runs a little higher than Arco's tank wagon -- tank wagon meaning the price oil companies charge their dealers. There's a certain amount of it that has to do with the freight, because the gasoline is picked up at the Cal Neva pipeline that terminates at Nellis Air Force Base," Greco said. "I'm going to guess that the typical transportation cost is 5 cents, 6 cents per gallon, tops."

The price difference of 18 cents between the cheapest gas in Las Vegas and the cheapest gas in Pahrump, seems less dramatic when similar gas station chains are used in the comparison. For example, the $1.55 per gallon charged at a Mobil station on Warm Springs and Las Vegas Boulevard in Las Vegas is only 8 cents per gallon cheaper than a Mobil station at the Winery Super Mart on Highway 160 and Winery Road in Pahrump which listed $1.63 per gallon.

"Arco chooses to be at the low end of the scale, they're more into a little less profit with a higher volume. That's their full pricing philosophy," Greco said. Actually, Arco, which doesn't have any stations in Pahrump, is now part of British Petroleum, the second largest corporation in the world, he said. "On the other end of the scale is Texaco, they have the attitude they're going to make maximum profit off every barrel of petroleum they use."

However, when it comes to buying, Greco said "gas is gas," consumers don't necessarily get a better gas by paying the higher price. Some gas stations don't have refineries everywhere in the country and trade gasoline with other companies, he said. For example, Citgo, a brand pumped at many 7-Elevens in Las Vegas, has its nearest refinery in Louisiana. Citgo trades gasoline with local refineries, only supplying a proprietary additive shipped by rail to make their own brand, Greco said.

"We see up in the Northwest, Washington state, where Arco has a large refinery in Bellingham, Wash., whereas Chevron has a large refinery in the San Francisco area. We'll see refinery swaps up there where Arco gas is delivered to many Chevron stations in Washington state. When you come down to California, Arco gas is delivered to Chevron stations," Greco said.

Some companies like Arco will divide a city like Las Vegas into differential price zones, he said.

"Chances are, you don't have a major oil company delivering direct to Pahrump. This brings up another issue. If you take name brand stations in Las Vegas and name brand stations in Boulder City, 99 percent of those stations are being delivered by someone hired by the major oil companies. That's called a direct delivery. When you get out to the rural areas like Pahrump the oil companies don't care about that for the moment, they do their business where the highest volumes are. They charge a price for their dealers in town," Greco said.

Greco described the three types of gas station pricing: the DTW, dealer tank wagon price, where the oil company owns the property on which the gas station is located, often the highest price; branded rack price, where the gasoline dealer owns the property, but sells brand name gas within a period under contract; and the unbranded rack price, described as "a wildcatter" who can buy from Texaco on Monday, Arco on Tuesday or Mobil on Wednesday, who only has to promise the proper octane rating.

"In Las Vegas, there's a lot of branded dealers," Greco said. "When he's in that business, unless he wants to go out of business, he's forced by those dealers' prices to match their prices."

He added, "When he gets on the outskirts, where the direct refiners are not delivering the gas, he doesn't have to lose money on every gallon he sells. Chances are, what he's selling out there in Pahrump is more directly related to the price he sells for."

The volume of gas sold can be much greater in Las Vegas too, Greco said, recalling how, when he owned a gas station, he could pay his bills selling regular unleaded for 2 cents per gallon profit, because he sold 300,000 gallons per month, while Pahrump gas dealers might only pump 90,000 gallons per month. Due to the higher price, some Pahrump residents who commute to work in Las Vegas starve their car before driving into Las Vegas he said, where they "pork it up" for the trip home, decreasing the volume of gas sold in Pahrump.

In the fiscal year ending June 30, 2000, there were 18.5 million gallons of gas sold in Nye County, only 3 percent of the 595 million gallons sold in Clark County, using Nevada Department of Taxation figures. While Clark County expects to receive $56.9 million in gas taxes this year, Nye County projects $757,000 in gas tax revenue.

Last year, former Pahrump town board chairman Ed Bishop urged Pahrump residents to buy more gas locally to put more money into local gas taxes. Clark County residents pay 52 cents in gas taxes, when federal, state and the maximum-allowable 9 cent county tax is included. Nye County taxes at the minimum four cents per gallon, adding up to 47 cents in total gas tax.

However, the average Las Vegas price for regular unleaded gas on July 17 was $1.58, a drop of 21 cents from $1.79 on June 12, according to a report from AAA Nevada. The average price in Carson City was $1.51, Reno $1.53 and Elko $1.70, AAA Nevada reported. Outside Nevada, the average price was cheaper in St. George, Utah at $1.45 per gallon, but Californians were paying higher prices, with an average price of $1.66 per gallon in Bakersfield, $1.79 per gallon in Sacramento, $1.87 in Los Angeles and $1.94 in the Bay Area.

At the Furnace Creek Chevron station in Death Valley National Park, where park rangers say prices almost hit $3 per gallon for premium gasoline earlier this year, a gas station employee said the price last week was only $2.17 per gallon for regular unleaded. However, gasoline prices at the Chevron station in Shoshone, Calif. were $2.35 per gallon, a waitress at the Crowbar Cafe said.

In Beatty, the price drop around town was dramatic when a third gas station opened next to the Stagecoach Casino on U.S. Highway 95 in late June.

"It dropped from $1.95 (per gallon) down to $1.47," said David Ringle, manager of the Death Valley Nut and Candy Co. "We more or less have been having a gas war over here."

Lisa Foster, AAA Nevada spokeswoman, said the rural areas drive up the state average price for gasoline.

"In the last month statewide, the prices dropped 16 cents," Foster said. "Vegas dropped 21 cents, Reno dropped 20 cents."

"Soaring and erratic gas prices, combined with a sluggish economy, have decreased demand for gasoline during the traditionally high-demand season," states a press release from AAA Nevada, quoting energy analyst Alan Kovski. "We expect this welcome downward trend to continue throughout the rest of the summer."

The AAA Daily Fuel Gauge Report is the most comprehensive retail gasoline survey available, with over 60,000 self-serve stations surveyed. Data is provided in cooperation with the OPIS Energy Group and Wright Express LLC.

"The decrease in demand is what's led to the lower prices. The producers were kind of caught off guard. They made more gas, they refined more gas than people have been using," Foster said.

The highest price recorded nationally was on May 15, when the national average hit $1.72 per gallon for regular unleaded, Foster said. The average price nationwide late last week was $1.42, she said.

The peak average price in Nevada was reached on March 27, of $1.87 per gallon, the average price today is $1.58, Foster said. The average price in Utah late last week was $1.55, down five cents from a month ago. In California, the statewide average was $1.83 per gallon, a drop of 17 cents.