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| Maine Gas Prices provided by GasBuddy.com |
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PORTLAND — The average gallon of regular gas in Maine is about $1.18 cheaper than one year ago, dropping about 12 cents in the last week to $2.35 per gallon, compared with a national average that dropped about 8 cents, to $2.19 in the last week.
That follows a drop in crude oil to about half its value during the summer. The steep fall in crude oil prices has had the strongest impact on what drivers pay at pumps across Maine, but there are a number of factors between the oil tanker and the gas tank that contribute to significantly different prices at different stations.
By reports from the gas price tracker GasBuddy.com, that difference Monday morning was nearly a dollar across all stations in the state, ranging from $2.12 per gallon to $3.09.
That lowest price, at Sam’s Club in Bangor, is four cents lower than the reported price for its Wal-Mart family counterpart in Scarborough. Chad Daggett, club manager for the Bangor store, said the store’s prices follow the market and are adjusted on a daily basis.
Daggett said he doesn’t make the purchasing decisions for the store’s fuel and couldn’t comment on what allows Sam’s Club in Bangor to beat other retailers in the state.
Gregg Laskoski, a senior petroleum analyst with GasBuddy.com, said pump prices depend on the wholesale price a retailer can secure. That price, in turn, depends on the volume of gas purchased and the timing — down to the hour — of purchases.
“A 24-hour difference can make a significant difference in the price at the pump,” Laskoski said. “If we’re talking about a large-scale retailer like a Sam’s Club or BJ’s, those types of businesses buy such tremendous volume that it’s almost inevitable that they’re going to be getting a price that’s probably not available to retailers who buy significantly less volume.”
The BJ’s locations in Auburn and Portland were also among the 10 cheapest in the state, which included the Irving in South Paris (at $2.15) and in Bangor (at $2.17) on Monday.
Laskoski said membership costs for those retailers do factor into the lower prices, but he noted gasoline can play a different role in their business model, used to attract customers
“Their objective is to drive traffic into the stores where customers will buy other items that have greater profit margins to make up the loss on gasoline,” Laskoski said.
Crude oil prices are the major component determining what gas stations pay, but they are also influenced by refining costs and the associated profit margin as well as retail and distribution costs and profit margins. Add in the profit margin required by retailers and that’s, roughly, the pump price.
There are still other factors, like the location of a specific station.
Laskoski said tourists are less sensitive to pump prices, meaning gas stations along the coast and in major tourist destinations are likely able to charge more without deterring customers.
Compared nationally, Laskoski said the Northeast also typically has higher pump prices for gasoline than states near the Gulf Coast or in the Midwest, driven in part by participation by most states on the Eastern Seaboard in a program requiring the sale of lower-emitting reformulated gasoline.
The Maine Energy Marketers Association, which represents oil and fuel dealers in the state, has supported the state’s adoption of those standards in 2015, saying that the fuel is more readily available in New England as other states now use that standard.
According to the Automobile Association of America, the statewide average for a regular gallon of gas dropped to less than $2 in seven states. That group is made up of Indiana, Kansas, Michigan, Missouri, Ohio, Oklahoma and Texas.
Federal regulations aimed at reducing emissions during the summer months when more cars are on the road also contribute to seasonal changes in gas prices. Seasonal fluctuations could start to drive pump prices back up as early as February, Laskoski said.
In the summer, Laskoski said the about 140 refineries in the country are required to start making a cleaner-burning summer blend, which costs more to produce and influences a seasonal increase in prices at the pump.
Prices typically drop every year around September, Laskoski said, due to a return to refining a less costly winter blend of fuel. Around the end of January, he said, refineries will gear up for summer blend production as winter inventories are cleared out, leading to a turnaround or slowdown in the decrease in prices.
“When prices do start to go up in 2015, they’ll be going up from a much lower floor than in previous years,” Laskoski said. “So, it’s going to be a much more palatable thing for consumers this year.”
It’s unclear how much further crude oil prices may fall, as the drop was driven largely by increased output from U.S. oil producers and a decision by the Organization of Petroleum Exporting Countries not to cut output.
“What happened in 2014 certainly caught a lot of people by surprise because nobody could have anticipated that crude oil prices would plummet as much as they have,” Laskoski said.
Reuters reported that investors have since December also increased bets that oil prices will continue to fall into the $40-$50 range.
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