From My Window… Time to take pressure off gas outlets; margin of profit fair

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Sean McMahon, Editor
Sean McMahon, Editor
The phone rang mid-afternoon this past Friday. On the other end was the owner of one of the outlets in Meeker that sells gasoline. He was angry. He said he would go door to door in Meeker and tell everybody to stop buying the newspaper because I was lying to them.
I don’t like being called a liar. I am not a liar. And that accusation got things boiling a bit within me. The Irish aren’t known for having a lot of tolerance, and I am a stereotypical Irishman when it comes to that. My (non-physical) fighting mood kicked in. I was ready for a verbal confrontation.
So, surprisingly keeping my cool and taking the caller up on his invitation to talk, I was on his doorstep within 15 minutes.
We spoke calmly and respectfully.
I explained that when I moved here, gasoline was $3.89 everywhere in Rio Blanco County. When I first wrote about it in the newspaper, it had been unchanged for roughly a year. And that is ridiculous.
Strangely enough, whenever I wrote about it — however short a reference — the next day we would see local gas prices again dropped by 10 cents per gallon. First it was $3.79, then $3.69, then $3.59 and while I did write about it again in the Dec. 26 edition, the price is now $3.49. However, there may be no credit to the newspaper on this one, because I believe the prices went down the day before or early the morning of the Herald Times hitting the streets.
This whole thing started when I wrote my first column on the subject and the price of gasoline had been, as I said, at $3.89 for nearly if not more than a year.
Next morning, the price dropped by a dime in Meeker and Rangely at every station but the Conoco stations in each town. They dropped their prices about a week later to match the other dealers.
The next day, I found out that one of the other gas outlet owners in Meeker had emailed me and copied in publisher Mitch Bettis in Arkansas. He complained that I had lied and that I knew nothing about the business.
The owner who emailed me and Mitch told us that his gas station only makes 3 to 5 cents markup per gallon, and he wanted to know why was I trying to put him and other gas station owners out of business.
What neither knew was that I am not a rookie on the gasoline beat, having worked on a series of stories in Laramie, Wyo., in the early 1980s that resulted in many of the gas stations there being fined very heavily, including much more than $100,000 for one of the Laramie outlets. I have fought the battle in other locations as well.
It is far from the truth that gas stations make only 3 to 5 cents per gallon. Let me give examples:
That first Meeker station owner told Mitch that he had paid about $28,000 for about 8,000 gallons of gas. That comes to exactly $3.50 per gallon, while his station was charging $3.89 — a markup of 39 cents per gallon.
When I went over on Friday to the local gas outlet owner, he showed me his invoice. It showed that he paid $3.22 per gallon while he was charging $3.49 per gallon.
First of all, I do understand the cost of business and I do understand that it costs more to sell gasoline here because these outlets don’t do the volume of a Denver station; the costs aren’t terribly high, but there is an added cost of transportation from Denver (even though it is added into the cost per gallon delivered); there are employees to pay and I am well aware that the equipment like pumps and filters, etc. are incredibly expensive to purchase in the first place.
There is state unemployment to pay, there are credit card fees the card issuers charge and, God forbid, the expenses spiral when a major piece of equipment fails. I recognize and honor that reality.
So, when I write he pays $3.22 per gallon and sells it for $3.49, that entire 27 cents is not pure profit. Far from it.
The owner said he hadn’t figured out what the overall profit is, or the exact real cost of a gallon, but it is a safe bet that the profit is somewhere above 4 cents and below 27 cents per gallon.
Fair enough. I’m going to stop picking.
Yes, these guys do all deserve to make a profit.
As the local owner said, and I fully believe him, “If we couldn’t sell gasoline for a fair profit, we would all be out of business.”
As the British say, “Spot on!” He is 100 percent correct.
That same owner said he truly doesn’t understand how some outlets on the Front Range have been able to sell their gasoline for $2.79 per gallon at the pump.
“If I had to do that while living in Denver, I would be losing a lot of money,” he said. “That is cheaper than I could buy it for if I lived in Denver.”
He also showed me that his most recent invoice reflected a cost of 5 cents per gallon in transportation costs — from Denver. He said it would have cost him — and he showed me the proof — 12 cents per gallon transportation from Grand Junction.
Go figure!
The owner here also said I was welcome anytime to come in and check out any of his invoices to see if there was any exorbitant profit being made per gallon. At some time, I may take him up on it. But I believe it is fair, right now, to back off.
One other reason I am backing off — in all fairness to the gasoline outlets — is because it was announced on the national news on Friday that the price of gasoline will be rising a bit through the first of the year and into January. Already, that low of $2.79 that was reported as the lowest price in the state two weeks ago had risen to $2.91 as of Tuesday.
This paper doesn’t, nor do I, begrudge any business person the right to make a profit and to make enough profit to live comfortably. This paper is also trying to protect its readers and area consumers from outlandish profits. Hopefully, we are doing both.
Making a fair profit makes a whole lot more sense than the much-higher markup when I first moved here.
The owner did say on Friday that he has never heard half as many complaints in his many years here as he has in the past six months and that he blames my column for that. I’d love to say I’m sorry about that, but I’m not.
I am grateful, however, for a bit more level playground than there was … and we can all get on with life, knowing that all parties are wiser and that gasoline prices locally are 40 cents per gallon cheaper — for now.
The public will keep its eyes on the prices again after the first of the year, and I believe the public is where the pressure should come from. I am going to believe that the owners are listening a little better now.

Happy (one-day-belated) New Year and for all, and let us hope it is a more prosperous and completely healthy year!

Great final regular season game by the Broncos.
It’s time to cheer them on to three more victories to capture the NFL championship at the Super Bowl.
Go Broncos!