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Fueling misconceptions

May 16, 2007|by ANDREW SCHOTZ

HAGERSTOWN - Selling gasoline is barely profitable.

Gas can legitimately be more expensive in one county than another.

A one-day public "boycott" won't mean a thing.

As the price of gas rises yet again - AAA Mid-Atlantic said Wednesday's national average of $3.09 a gallon was a record high - facts sometimes are clouded by emotion.

Those with fuel connections often hear people get it wrong.

In a recent National Association of Convenience Stores survey, more than half of the respondents thought major oil companies own most gas stations.

Actually, about 97 percent of gas stations are not owned by major oil companies, association spokesman Jeff Lenard said.

A quarter of the respondents pegged a station's profit for a gallon of gas at 10 to 50 cents. Nine percent guessed it was more than $1.

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Lenard said it's more like a few cents; some stations break even on gas or lose money, especially on credit-card sales.

It might be counterintuitive, but higher gas prices often cut into stations' profits, Lenard said. If the wholesale price goes up five cents overnight, "there's no way you can pass that on," he said. "If you're five cents above your competition, you might as well turn your pumps off."

AAA Mid-Atlantic spokesman Troy Green said people underestimate their power of conservation.

Drivers can control gas consumption, or at least minimize it, he said.

Yet, each month in 2007 has had record gas demand and the summer driving season seems to have begun early, he said.

"People are still really out there driving their vehicles," Green said.

An Internet myth fueled a campaign to hold a gas boycott Tuesday.

"It has been calculated that if everyone in the United States and Canada did not purchase a drop of gasoline for one day and all at the same time, the oil companies would choke on their stockpiles," an older version of the e-mail campaign says. "At the same time it would hit the entire industry with a net loss of over 4.6 billion dollars which affects the bottom lines of the oil companies."

Snopes.com, a Web site that debunks urban legends, says the boycott premise is "inherently flawed, because consumers' not buying gasoline on one particular day doesn't affect oil companies at all.

"The 'gas out' scheme doesn't call upon people to use less gasoline, but simply to shift their date of purchase and buy gas a day earlier or later than they usually would. The very same amount of gasoline is sold either way, so oil companies don't lose any money."

Then there's the persistent question of why gas is cheaper in, say, Frederick, Md., than in Hagerstown.

The Maryland Energy Administration explains: "In areas that have poor air quality, gas stations sell reformulated gasoline (RFG) which is better for the air. Reformulated gasoline costs more to refine, and as a result costs about 10 cents more per gallon at the pump."

Washington County, which doesn't meet federal air standards, needs RFG, the Maryland Energy Administration says.

State taxes create other price differences. The state gasoline tax is 23.5 cents per gallon in Maryland, 31.2 cents in Pennsylvania and 31.5 cents in West Virginia, according to government agencies and a nonpartisan tax research group.

The federal gasoline tax, on top of the state taxes, is 18.4 cents per gallon.

Maybe public attitude toward gasoline prices is the misperception, said Dan J. Spreng, the president of Expedited Services, a trucking, warehousing and brokerage company in Hagerstown.

"Now it's $3 a gallon of gas that's dug out of the ground in Saudi Arabia, shipped here, refined and trucked to a location, a gas station," he said. "And we pay $3 for that gallon of gas and complain mightily, which I guess we should.

"And we pay a dollar, $1.50 for a bottle of water and we won't even blink when we do it."

Spreng said high gas prices would be a blessing if they get the country to think about alternative fuel. "We had it too easy for too long," he said.

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