Austin lags behind state gas prices
Published 10:41 am Wednesday, May 18, 2011
Although gas prices have fallen in several Minnesota cities over the past few weeks, Austin’s prices have held near $4.
The situation has both gas station owners and consumers upset and wondering what will happen.
Dan Ruzek, local citizen and on-the-road salesman for 25 years, said he’s seen a trend in Austin over the past few years. He said Austin seems to be the last city to fall when crude oil prices drop.
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Some residents believe the price will fall near $3.
“It will come down again,” said Jeff Trimble, owner of Trimble’s Cycle Center in Austin. According to him, the larger local convenience store chains control the prices.
Trimble’s Cycle Center has sold gas for decades, and Trimble has experienced the issue. He predicts fewer people will be traveling this summer if gas stays high, which means they won’t be spending their money or helping the economy. He also said if prices were to go any higher, the government would have to step in to guard the economy.
Trimble and Ruzek have both noticed a trend. When crude prices fall, retail prices drop slowly. But when crude prices rise, retail prices jump quickly.
And the current situation isn’t helping area businesses.
“We don’t try to make a living on gas anymore,” Trimble said.
Becky Rasmussen, general Manager of Austin Auto Truck Plaza, said prices have been unpredictable.
“I have no idea what they’re going to be doing,” she said. “I don’t know why they are doing what they’re doing.”
Rasmussen said it can be frustrating, especially if people fill their tanks on the wrong day.
“I’m sure (customers) are frustrated,” she said. “Everyone is.”
Jon Shaw, owner of Lake Geo Travel Plaza, gets his gas prices from the fuel distributors, which in turn get their prices from the oil companies. He said there’s no reason for prices to be so high, but oil companies always seem to find a reason.
“They came up with a lot of excuses,” Shaw said. “The Mississippi was rising, heading towards the refineries down in the gulf in Louisiana. The war in the Middle East. Every time you ask them, they’ve got a good excuse for it.”
The continual price flux is different than when Shaw first built Lake Geo seven years ago. The prices would change significantly in the spring and fall, not all year, and Shaw doesn’t expect prices to drop until this fall.
“People are traveling and (oil companies are) just taking advantage of it,” Shaw said.
City officials are also concerned.
Police Chief Brian Krueger said his officers have been taking measures to conserve gas.
“It’s obviously a concern when the prices are up, but we have taken steps to try to reduce our gas consumption,” Krueger said. “We’re trying to do a few things that will hopefully save us some money.”
Warm weather is also easing the pain, since officers don’t need to keep their cars running for warmth. Krueger also sees a few gas drive-offs each week, but, he said, the high prices haven’t caused an increase there.
Prices falling back to the low $3 range may not be the solution, however.
According to the U.S. Energy Information Administration, prices have been rising faster than normal in the last two years. One year ago, the average price in the Midwest was $2.80 per gallon.
Toby Madden, regional economist with federal reserve bank in Minneapolis, doesn’t look much further than supply, demand and cost factors.
“Basic economics would tell you it’s supply and demand,” he said.
Madden added when demand drops, effects aren’t seen immediately. There is a sort of delayed reaction. However, he thinks demand will change as it always does.
“Over long periods of time, there seems to be changes to demand,” he said.
Madden doesn’t think there’s anything behind Austin’s prices. “I haven’t read any studies on that,” he said. Madden added Austin’s relative location to refineries, transportation costs and gas taxes all play a role as well.
But like many consumers, Trimble and Ruzek think there is more to the situation, including the oil companies and the prospectors.
“The guy playing the market is driving prices up,” Trimble said. “It really isn’t all the oil companies.”
Regardless of what may or may not be happening behind the prices, Madden said EIA is the best source to see what gas prices will do. “They deal with this every single day.”
EIA.gov projects retail gasoline average price to be $3.66 for 2012.