Probe gas prices
Consumers here deserve reasons for nation-leading costs at the pump
Some officials of the federal government are consumed with the question of whether the big automakers are too big to fail. Some other government employees should be concerned with the question of whether some components in the gasoline supply chain are too big to compete.
The Federal Trade Commission, with helpful prodding from local elected officials, has noticed that the price of gasoline still is higher in Western New York than anywhere else in the continental United States.
The price is as obvious as the sign above the convenience store. The reason seems to have everyone stumped.
If the FTC is going to honestly assess the situation, and stand by its mission to guard American consumers from business piracy, the first thing it has to consider is that the market forces that have driven the price of fuel down by greater amounts absolutely everywhere else in the country are somehow out of whack here.
For weeks now, motorists in Buffalo and the rest of Western New York have been stung by the knowledge that the price they pay for gasoline is the highest in the country. Oh, sure, it’s down from the $4 level is was at not that long ago. But when Buffalo residents are paying $2.54 a gallon for a commodity that is costing a nationwide average of $2.05, something is still wrong.
People who worry about this sort of thing were warning in the early part of this decade that the oil industry was becoming dangerously concentrated. Mega-mergers and joint operations gave the top five oil companies half of the nation’s refining capacity and 62 percent of the country’s retail sales. Add to that the fact that certain regions may find themselves with only a pair of big wholesale or retail players, and the legitimate worry was that there was no reason for gasoline prices to go down a jot as long as people needed to fill up their SUVs.
But things have changed. Some of the oil giants have shed their retail operations, reopening the market to some hope of street-corner competition. Price shocks and other concerns actually caused many people to worry about how much gas they were using. Prices fell.
Why did they fall more elsewhere? Proposed answers, everything from tax rates to environmental rules, would explain why Buffalo gas is more expensive than, say, Charlotte gas. But it doesn’t begin to explain why it is significantly more expensive than Syracuse gas and Albany gas. Or why this is a phenomenon that is new to the area.
To get to the bottom of that question, FTC investigators will have to follow the supply chain all the way from wellhead to gas pump, looking for bottlenecks. If, at any point, they find that there are too few refiners, distributors, transporters or retail chains to put downward pressure on the price at any step along the way, then those choke points need to be identified and eliminated.
That’s likely to be much easier said than done. But the people of Western New York — and of the next region to have the honor of paying the nation’s highest gas prices — deserve to know the reason why.
Log into MyBuffalo to post a comment
MyBuffalo is the new social network from Buffalo.com. Your MyBuffalo account lets you comment on and rate stories at buffalonews.com. You can also head over to mybuffalo.com to share your blog posts, stories, photos, and videos with the community. Join now or learn more.
Reader comments
Learn more about our moderation system.