Fuming over city gas prices

COLUMBUS - Reported gas price differentials of nearly 20 cents per gallon have many locals fuming, questioning why recent history has shifted and Columbus has become more expensive than surrounding communities.

Within the past year, Columbus has reported some of the lowest regular unleaded fuel prices in Nebraska, according to AAA's Daily Fuel Gauge report. But in recent weeks that trend has shifted.

Places such as Omaha and Grand Island are reporting prices 18 cents lower for a gallon of regular unleaded, and Fremont and Lincoln are reporting prices 13 cents less per gallon.

The volatility of fuel costs are affecting the every day cost of living and some fuel companies and distributors refused to accept questions regarding why local prices were higher than most in the region and provide reasons for its cause, but Jed Brunken, owner of Corner Stop, 220 23rd St., tried to provide some answers.

A couple of reasons may be, because Columbus has been supplying fuel at a lower cost, owners are trying to recoup some of their costs, and none of the competitors in the local market are trying to under price the others.

“People are playing catch up a little bit,” Brunken said. “In my experience, competition sets the price, so you survey the prices, and if they are within reason, that is what you try to do. At times, if I had tried to be there with everybody else, I would be seeing a loss if I had been matching people.”

One Columbus insider, who requested not to be identified, said that is a reason why fuel prices in certain Omaha areas are so low, because they are in a “gas war.”

“We are too high, they (Omaha) are too low,” the insider said. The person also confirmed one of Brunken's reasons, stating, “it is about time we are making money after selling gas at 5 cents below cost.”

An Omaha insider, who also requested not to be identified, said the price war was localized and another possible reason for the price differences is because of volume pricing, stations in more urban areas, such as Omaha and Lincoln, are able to get better pricing deals due to the volumes they purchase, although that would not explain why for much of the year Columbus has provided fuel for nearly 10 cents a gallon cheaper than Lincoln.

The Columbus insider also mentioned the introduction of a new competitor in the market, Hy-Vee, reduced prices as they provided lower cost fuel to gain hold on part of the market.

Brunken said another impact on prices are credit card fees as using plastic has become the preferred method of payment, which create a circular dilemma.

“As prices are higher people use plastic more,” he said, but “as people rely more on plastic, it increases costs tremendously.”

The credit card company charges Brunken 10 cents per transaction plus an additional 2 percent of the sale total, he said, so more than 6 cents per gallon is sent to the credit card companies, which significantly impacts the marginal return on each gallon of gas sold and often times results in his business breaking even on fuel sales.

“That leaves nothing for overhead, such as employees, repair, maintenance,” Brunken said.

Low fuel supplies and demand for gas have also driven up the market prices, he said.

“I have been out of one grade (of gas) several times because it was not convenient to get it from Columbus. About two weeks ago I had to have gas hauled in from Omaha because there was no gas in Columbus, Geneva, Norfolk or any of the closer places. Omaha was closest place I could get gas for,” Brunken said. “I was told there were three stations out of gas at that time.”

Mitch Beaumont, Nebraska AAA spokesperson, said there is hope for lower prices on the horizon with anticipation of a stabilizing market and price decline as the travel season nears an end.

“We're entering a time where summer driving demand is gone so there is less demand for oil and gas,” which will have an impact on prices, Beaumont said. “If we can make it through the hurricane season and into the winter months with less travel demands (prices) may even out more.”

Brunken said he understands consumer's concerns but wants them to also understand his position as a gas station owner, especially in light of the closure of one gas station and some gas stations that have been put up for sale in the last year.

“Hopefully this is a temporary situation,” he said, and, with the 6 cent decline for a gallon of regular unleaded gas, it appears things “are starting to get back in line.”