FUEL THEFT IS UP—WHAT YOU CAN DO:
Now is the time to take extra precautions to protect the fuel that you have so much money invested in.

CARDLOCK CUSTOMERS—please review your cardlock invoices carefully. If twice a month invoices are not often enough, contact your office and we can set you up to review your transactions online with CFN. Fuel thefts are occurring through the cardlock system via lost cards, stolen cards and employee theft. If you are fueling at a facility and notice any questionable activities, please call our office.

FUEL TANKS—make sure you have locks on your tanks. By switching your locks from a locking gate valve with a locking ball valve can deter fuel thefts. (Tank must be empty to switch out locks—contact our office for more information)

On underground tanks it is very difficult to make changes to prevent theft due to the environmental requirements. Contact our office for more information on what we have tried.

BLAME THE CREDIT CARD COMPANIES FOR AIDING HIGHER FUEL PRICES?
Half of a gas station’s fuel profits go to credit card fees. With the price of fuel increasing substantially over the last several years, stations are paying credit card companies 5-7 cents per gallon in processing fees. On the average last year gas station’s revenues from fuel sales grew 25%, while the fees they paid to credit card issuers jumped 40%. Credit card fees are charged on the total $ of the sale. Astute station owners must be aware of the impact on their bottom line and actually increase their margin profit to offset the credit card fee impact that rising fuel prices cause.
(from SmartMoney.com—What Gas Stations Won’t Tell You)

UNDERSTANDING GASOLINE PRICES:
A Primer on Gasoline Prices
(from www.eia.doe.gov)

Gasoline, one of the main products refined from crude oil, accounts for just about 17 percent of the energy consumed in the United States. The primary use for gasoline is in automobiles and light trucks. Gasoline also fuels boats, recreational vehicles, and various farm equipment. While gasoline is produced year-round, extra volumes are made in time for the summer driving season. Gasoline is delivered from oil refineries mainly through pipelines to a massive distribution chain serving 168,987 retail gasoline stations throughout the United States.1 There are three main grades of gasoline: regular, mid-grade, and premium. Each grade has a different octane level. Price levels vary by grade, but the price differential between grades is generally constant.

WHAT ARE THE COMPONENTS OF THE RETAIL PRICE OF GASOLINE?
Source: Energy Information Administration
The cost to produce and deliver gasoline to consumers includes the cost of crude oil to refiners, refinery processing costs, marketing and distribution costs, and finally the retail station costs and taxes. The prices paid by consumers at the pump reflect these costs, as well as the profits (and sometimes losses) of refiners, marketers, distributors, and retail station owners.
In 2004, the price of crude oil averaged $36.97 per barrel, and crude oil accounted for about 47% of the cost of a gallon of regular grade gasoline (Figure 1). In comparison, the average price for crude oil in 2003 was $28.50 per barrel, and it composed 44% of the cost of a gallon of regular gasoline. The share of the retail price of regular grade gasoline that crude oil costs represent varies somewhat over time and among regions.
Federal, State, and local taxes are a large component of the retail price of gasoline. Taxes (not including county and local taxes) account for approximately 23 percent of the cost of a gallon of gasoline. Within this national average, Federal excise taxes are 18.4 cents per gallon and State excise taxes average about 21 cents per gallon.2 Also, eleven States levy additional State sales and other taxes, some of which are applied to the Federal and State excise taxes. Additional local county and city taxes can have a significant impact on the price of gasoline.
Refining costs and profits comprise about 18% of the retail price of gasoline. This component varies from region to region due to the different formulations required in different parts of the country.
Distribution, marketing and retail dealer costs and profits combined make up 12% of the cost of a gallon of gasoline. From the refinery, most gasoline is shipped first by pipeline to terminals near consuming areas, and then loaded into trucks for delivery to individual stations. Some retail outlets are owned and operated by refiners, while others are independent businesses that purchase gasoline for resale to the public. The price on the pump reflects both the retailer’s purchase cost for the product and the other costs of operating the service station. It also reflects local market conditions and factors, such as the desirability of the location and the marketing strategy of the owner.

WHY DO GASOLINE PRICES DIFFER ACCORDING TO REGION?
Although price levels vary over time, Energy Information Administration (EIA) data indicate that average retail gasoline prices tend to typically be higher in certain States or regions than in others Aside from taxes, there are other factors that contribute to regional and even local differences in gasoline prices:
Proximity of supply - Areas farthest from the Gulf Coast (the source of nearly half of the gasoline produced in the U.S. and, thus, a major supplier to the rest of the country), tend to have higher prices. The proximity of refineries to crude oil supplies can even be a factor, as well as shipping costs (pipeline or waterborne) from refinery to market.

Supply disruptions - Any event which slows or stops production of gasoline for a short time, such as planned or unplanned refinery maintenance, can prompt bidding for available supplies. If the transportation system cannot support the flow of surplus supplies from one region to another, prices will remain comparatively high.
Competition in the local market - Competitive differences can be substantial between a locality with only one or a few gasoline suppliers versus one with a large number of competitors in close proximity. Consumers in remote locations may face a trade-off between higher local prices and the inconvenience of driving some distance to a lower- priced alternative.

WHY ARE CALIFORNIA GASOLINE PRICES HIGHER AND MORE VARIABLE THAN OTHERS?
The State of California operates its own reformulated gasoline program with more stringent requirements than federally-mandated clean gasolines. In addition to the higher cost of cleaner fuel, there is a combined State and local sales and use tax of 7.25 percent on top of an 18.4 cent-per-gallon Federal excise tax and an 18.0 cent-per-gallon State excise tax. Refinery margins have also been higher due in large part to price volatility in the region.
California prices are more variable than others because there are relatively few supply sources of its unique blend of gasoline outside the State. California refineries need to be running near their fullest capabilities in order to meet the State’s fuel demands. If more than one of its refineries experiences operating difficulties at the same time, California’s gasoline supply may become very tight and the prices soar. Supplies could be obtained from some Gulf Coast and foreign refineries; however, California’s substantial distance from those refineries is such that any unusual increase in demand or reduction in supply results in a large price response in the market before relief supplies can be delivered. The farther away the necessary relief supplies are, the higher and longer the price spike will be.

California was one of the first States to ban the gasoline additive methyl tertiary butyl ether (MTBE) after it was detected in ground water. Ethanol, a non-petroleum product usually made from corn, is being used in place of MTBE. Gasoline without MTBE is more expensive to produce and requires refineries to change the way they produce and distribute gasoline. Some supply dislocations and price surges occurred in the summer of 2003 as the State moved away from MTBE. Similar problems have also occurred in past fuel transitions.
Environmental programs - Some areas of the country are required to use special gasolines. Environmental programs, aimed at reducing carbon monoxide, smog, and air toxics, include the Federal and/or State-required oxygenated, reformulated, and low-volatility (evaporates more slowly) gasolines. Other environmental programs put restrictions on transportation and storage. The reformulated gasolines required in some urban areas and in California cost more to produce than conventional gasoline served elsewhere, increasing the price paid at the pump.
Twenty-five States have passed legislation to restrict the use of the gasoline additive MTBE but only California, Kentucky, Missouri, New Hampshire, New Jersey, New York, and Rhode Island relied on the additive. The Energy Policy Act of 2005, signed into law in August 2005, also allows refiners to discontinue use of oxygenates (including MTBE) in reformulated gasoline. Because of the concerns of groundwater contamination, MTBE is expected to be phased out in the U. S. in the next few years. MTBE removal requires large changes to gasoline production and distribution. California faced temporary supply dislocations and price volatility during the summer of 2003 as MTBE was removed from gasoline in the State. Nevertheless, New York and Connecticut had a relatively smooth transition phasing out MTBE in 2004 as a result of better preparation from the gasoline suppliers and distributors.

Operating costs - Even stations located adjacent to each other have different traffic patterns, rents, and sources of supply that influence retail price.

This brochure is available at:
http://www.eia.doe.gov/neic/brochure/oil_gas/primer/primer.htm

http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/
primer_on_gasoline_prices/html/petbro.html