County curious about effect of gas tax increase on price at the pump

INDIAN RIVER COUNTY — The Board of County Commissioners has asked budget director Jason Brown to find out if the price of gasoline in Indian River County is too high.

Commissioners Bob Solari, Gary Wheeler, Peter O’Bryan, Wesley Davis and Joe Flescher have been on a mission the last four years to cut the county budget where necessary in order not to raise taxes on their constituents. However, they are looking at long-range planning commitments that will eventually call for infrastructure improvements including county roads and bridges.

To help pay for those improvements, the county could raise the gas tax by 6 cents a gallon to the maximum allowable level of 12 cents per gallon.

However, before they even contemplate such a move — which would be years down the road — the commissioners asked Brown to start charting the price of gas and comparing it to Brevard County (with a 6-cent a gallon tax), St. Lucie County (12 cents) and Martin County (12 cents).

They wanted to know what effect raising the gas tax might have on gas prices in Indian River County.

So every week since the beginning of the year, Brown’s staff has been charting the price of gas at similar Sunoco, 7-Eleven, Hess and BP stations in the four counties.

He has found there is no apparent rhyme or reason to the price of gas on the Treasure and Space coasts.

Indian River County drivers generally pay more for gas than Brevard County with its similar 6 cents a gallon tax and more — but not necessarily 6 cents more — than residents of St. Lucie and Martin counties.

So it would seem from what Brown has uncovered so far it really doesn’t make a difference what the tax rate is on a gallon of gas. Drivers will ultimately pay what mysterious market forces determine the market will bear.

“It doesn’t appear that the tax that is levied has an overriding effect on the price we pay at the pump,” he said.

So what does have an effect on the price drivers pay at the pump? Gas station owners say it is the oil companies.

“The way it works with the oil companies is they do something called corner-to-corner marketing,” said Mark Hall of Mark’s Mobil, who stopped selling gas at his 43rd Avenue and State Road 60 station in Vero Beach last year. “That means if the guy across the street is selling gas for $2.50 a gallon, that is what they are going to base your price on. They can’t tell you how much money you are going to make, but they can regulate what they sell it to you for. So they can look down the street and say ‘OK, I know the guy down the streets sells gas for $2.55 a gallon so now I am going to sell it to you for $2.55’.”

And, if owners like Hall are to be believed, they monitor prices on an almost hourly basis.

Companies like Mobil have the ability to check credit card charges through their satellite hookups and apparently keep a close eye on those transactions.

Hall said that when he wanted to change prices, he would not tell anyone. Instead, he would simply change the price.

Often times, he said that within hours, his new price would be reflected in the computerized sites that monitor gas prices.

“I never reported my fuel prices to anyone,” he said “I don’t have anything to log on to or tell anybody what I am selling my gas for. I would just go out and change a sign. But within three hours, the system would know how much I was selling gas for. It was amazing how fast they knew it.”

Patrick DeHaan, senior petroleum analyst for GasBuddy.com, which monitors gas prices around the country, said oil companies monitor more than just the price of the guy down the street. He called it zone pricing.

“Zone pricing takes in a lot of factors — the area, the income of the people living in the area, the station down the street, things like that,” he said. “Essentially the oil company looks at all kinds of data to determine where to set prices. That is why two of the same gas stations a mile up the street may sell at a different price. There is a whole host of information that stations look at to set their prices.”

He did say that gas station owners that can time their purchases to when wholesalers’ prices are down can realize significant savings, and he did not discount that taxes do play a role in how prices are set from county to county.

“Timing, taxes and competition are the three main factors that make for the difference in price,” he said.

However, Gene Duffy of Duffy’s I-95 Mobil said it is not that easy. Retailers pay the price charged on the futures market the day the gas is delivered.

“Every day there is a price change depending on how gasoline is traded on the market,” he said. “I could get a 4-cent increase one day and the next day it is a 2-cent decrease.”

Hall said the prices varied from station to station, even those that were buying the exact same wholesale gas.

“We would get fuel prices updated every day, and that is what price you paid when they did their drop off,” he said. “I had friends in other counties who would tell me what their takeaway price was and it would be different than mine. Same gas, same Mobil outlet, everything. It was sometimes lower and sometimes higher.”

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