Ask Andy: Gas price hike - WMC Action News 5 - Memphis, Tennessee

Reported by Andy Wise

Ask Andy: Gas price hike

As I write this (3:20 pm, Friday, May 22), gas prices have jumped an average 15 percent nationwide in the last three weeks. 

Some Memphis gas stations have raised their prices as high as 30 cents a gallon during that time.

You talk to refineries and distributors like Valero in South Memphis, and their people blame the prices on two things:

* THE RISING COST OF CRUDE OIL.  Gas retailers say crude oil has jumped 20 percent in the last three months, proportional with the 20 percent increase in the stock market.  "They work in tandem," says Jamie Patterson of Flash Market fuel retailers in West Memphis, AR.

* THE SWITCH FROM WINTER GRADE TO SUMMER GRADE GAS.  Bill Day of Valero Energy Corporation says federal regulations mandate the change to summer grade now.  He says summer grade fuel is more expensive to refine.

But here's my issue, and it appears to be our viewers' issue, too:  some gas stations are hiking prices on gas they've already paid for, the stuff in their tanks delivered days ago.

"Michelle" of Olive Branch, MS, asks in her e-mail:

"Can you please tell me why I paid $1.99 for gas Friday and (four days later) it's up to $2.15 a gallon?"

Shoot, Michelle, be glad you're not filling up in Memphis!  My producer and I photographed the Mapco Express station at the intersection of Danny Thomas and Linden east of FedExForum Friday. 

Regular unleaded was $2.35 a gallon.  Three weeks ago, it was somewhere in the low $2.00's.

Patterson says the prices at the pumps are a reflection of the turn-around season and crude oil's impact on wholesale prices.

"(Patterson) You got market moves as much as ten cents in two days, easily. Our cost goes up that much easily."

"(Andy) Because of wholesale prices?"

"(Patterson) Because of wholesale prices. It all has to do with wholesale."

"(Andy) But we've actually seen in some cases where retailers are changing prices mid-stream. The gas hasn't changed in the tanks! It's still the same gas they paid for in the tanks! Why are they changing prices mid-stream?"

"(Patterson) Well, that actually depends on the location. You've got some stores that will do two loads a day. So...you will have some stores that will do less than that. Typically, what you see is on the way up, you'll see guys move as the price moves, as the wholesale price moves."

As for the high gas prices in Memphis, even though the refinery that fills the gas stations is smack in the south side of town, Day says, "The location of the refinery doesn't have much to do with it, except as it relates to transportation costs. Oil and gasoline are commodities that trade on the New York Mercantile Exchange (much like stocks trade on the New York Stock Exchange) and prices change minute by minute."

Minute by minute, we edge closer to the start of the Memorial Day holiday weekend.  The number of drivers will be up.  Gas demand will increase.  Gas supply will shrink. 

The prices just might rise again.

AAA's Fuel Gauge Tracker is an invaluable tool for checking gas prices nationwide:  http://www.fuelgaugereport.com/.

 

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