Motorists here fuming over gas prices
Cost to consumers in Kingman higher than in any other Arizona city
KINGMAN - While gas prices statewide began the year at their lowest level in nearly five years, prices in Kingman remain among the highest in the continental U.S.
The average price for a gallon of regular unleaded was $1.91 in Kingman as of Wednesday afternoon, with prices ranging from as low as $1.819 to as high as $1.999, according to AAA Arizona's online Fuel Price Finder.
While that price remains well below the $3.016 it was at the beginning of 2008, it remains substantially above Arizona's current average of $1.593, and it even exceeds California's $1.843, currently the highest in the lower 48 states.
Kingman's gas prices also outpace those in every other region of the state. Of Arizona's major metropolitan areas, only Flagstaff's $1.831 average comes close to Kingman's, with Prescott at $1.622, Scottsdale at $1.563, Tuscon at $1.544 and Phoenix paying just $1.488.
Even in Mohave County, Kingman is paying more than its closest neighbors, with Bullhead City's average at $1.799 and Lake Havasu City's at $1.812.
AAA Arizona's Public Affairs Director Linda Gorman offered several reasons why regional prices are so much higher than the statewide average.
The first, she said, is due to a shift in where Arizona's gas comes from.
With no refining capabilities of its own, Arizona has to import 100 percent of its gasoline, and that gas comes in through two major pipelines, one from the east, one from the west.
"Depending on the time of year, it used to be about 60-40, 60 percent coming from the west, 40 from the east," Gorman said.
"Now it's really tipped, with as much as 80 percent coming from the east."
Gorman said the reason for that is because oil companies have found it more profitable to sell gas to California rather than Arizona, since California charges higher for gas on average, allowing the companies to make more money.
"Simple economics - it's more profitable for them to sell to California," Gorman said. "They can get more for it."
But the western pipeline also supplied much of northern Arizona, and with that supply diverted, gas now has to be trucked up from the southern and central parts of the state.
"You're going to expect prices in Flagstaff and Bullhead City and Kingman to be higher because of transportation costs," Gorman said.
"Gasoline has to be trucked to those destinations from the tank farm in Phoenix."
But Gorman noted there are no outstanding supply issues currently, and demand for gas has remained low through the holiday season. For that reason, she said, it's difficult to pinpoint exactly why Kingman's gas prices remain higher than even its closest neighbors.
"The only conclusion we're able to come to at this point is that they're able to get that price because they can," she said. "There is no gas-gouging law in Arizona, so stations can charge what they want. It's not illegal to sell gasoline at high prices unless there is some other illegal activity involved."
Gorman noted that Arizona is one of the least profitable states in which to sell gasoline, with the average station making a mere 1.6 cents off every gallon sold. By comparison, the national average is 11 cents per gallon.
"It could be that there's one part of the state that's making up for the low margin, but that definitely has something to do with it," Gorman said. "If these are independently-owned gas stations, and about 95 percent of stations in Arizona are, it could be that they're just trying to stay afloat, they don't have corporate to back them."
Cynthia Dooley is a cashier working at one such station, the Airway Express at 3461 Andy Devine Ave., where gas stood at $1.85 Wednesday morning.
Dooley said her station's prices are defined by what the distributors offer to sell it for, with several companies offering different prices each day.
"We have to go by what we have to pay," she said. "I don't know why we have to pay more; they say shipping, but that doesn't make sense because Golden Valley's only 10 miles away."
Dooley noted that the amount of gas the station purchases also affects the price. The more gas a station buys, the less expensive it is; but in a small town with plenty of neighboring stations, the need to stay competitive while remaining financially solvent is an ever-present concern.
"We try to keep it all even," Dooley said. "If we're charging too much, we're losing money and people are going to go somewhere else, so we have to keep our prices as low as we can according to what we have to pay for the gas."
Becky Bullen is the manager of another independent station, the Gas-N-Grub at 2201 Hualapai Mountain Road. She said credit card companies bear some of the blame for Kingman's high prices, due to the way they charge stations a percentage for each transaction.
"If you're only charging a penny and a half more than what you're being charged for the gas, then you're losing money because you have to pay the credit card companies for the use of credit cards, and most of the gas is purchased with credit cards," Bullen said. "It'd put you right out of business if you didn't take into consideration the credit card companies and what they're charging at the pump."
Bullen said such charges weren't a serious problem for gas stations when prices were low, but when gas jumped above $3 a gallon and stayed there for a year, she said it forced stations to choose between charging more per gallon to cover the increased credit card costs, or staying competitive and cutting back where they could. Surviving stations, she said, took the second option.
"For a while there we were making some money, but it was just getting us into the black," she said. "We were hurting because the prices were high for so long and we were losing money because of the credit card companies. For a year there it wasn't dropping, and we were trying to keep from drowning."
Even now, with prices below $2 again, Bullen said the gas stations' troubles are far from over. With the ongoing recession causing fewer consumers to come into the store to make purchases, stations are under additional pressure to raise gas prices to recoup the lost sales.
"It's not that we're trying to rip anybody off," Bullen said.
"It's that we're just trying to keep business going."