FOCUS: GAS PRICES
WNY's gas price mystery: Why so high?
Gasoline prices in the Buffalo Niagara region continue to be the highest in the state. Saturday, a gallon of regular cost an average of $3.01, 28 cents more than in Utica, 33 cents higher than the Albany area and 37 cents above what people were paying in Syracuse.
Even worse, consumers paid 55 cents more a gallon than the national average of $2.46, and a whopping 91 cents above the national low of $2.10, posted in Oklahoma.
Why do Western New Yorkers pay even more than others in a state that, within the continental United States, trails only California in high gasoline prices?
Local industry insiders say they are unable to provide a specific conclusive reason. But they suggest a combination of factors, including the cost of transporting gasoline products the longest distance in the state, poor access to refineries, the role of direct marketers in setting prices and the high county sales taxes in the region — 4 percent in Niagara County and 4b percent in Erie County, tied with Oneida County at the highest in the state.
“It’s a market-driven price,” said Dale Wittlief, vice president of purchasing and fuel for Delta Sonic.
Wally Smith, a spokesman for the AAA of Western and Central New York, said his organization has tried to get a clear explanation from retailers, wholesalers and trade organizations on why the region’s pump prices are exceptionally high, but has not come up with a satisfactory answer.
“The fact remains: Drivers in this region pay more for fuel than any place in the state,” Smith said.
Still, as prices dip below $3 a gallon, drivers such as Tanya Taliaferro, a traveling nurse who lives in Cheektowaga, are expressing relief.
“It used to cost me $90 to fill up, and it’s only $65 today,” Taliaferro said at a Sunoco station at Delaware Avenue and Amherst Street that charged $2.95 for regular.
Cab driver Rick Forno was glad to pay $2.92 a gallon at a Delta Sonic in Amherst, but he expects the low prices to be short-lived.
“I’m obviously feeling pretty good about it, but I think it’s tied to this Wall Street problem. Once they figure that out and get it squared away, I’m sure the price of a barrel will go back up,” Forno said.
Area residents who travel out of town are often stunned to find drastically lower prices. In Cleveland, a three-hour drive to the west, drivers paid an average of $2.21 per gallon Friday; in Cincinnati, the price was down to $2.07.
But Scott Sterry, who handles fuel marketing for Reid Petroleum in Lockport, said comparing prices from state to state is difficult because of a variety of factors, including taxes.
As for why prices are higher here than in other parts of the state, one reason is that Erie County has a higher sales tax.
Pipeline and refineries
Transportation costs also go up with the distance from a product source, such as the New York City Harbor, Sterry said.
A pipeline that ends in South Buffalo delivers refined petroleum products from a Valero refinery in Paulsboro, N.J., and from New York City Harbor, distances that add to costs passed on to consumers.
Michael Newman, executive vice president of NOCO Energy Corp., which operates area gas stations and convenience stores, cites refinery locations. An Ontario refinery once served Western New York closed a few years ago, while another, in northwestern Pennsylvania, has been undergoing maintenance.
“We’re in this very difficult supply-constrained market,” Newman said.
Newman said the market also has less “flexibility,” partly because rapid price changes make retailers reluctant to store too much inventory.
Smith, of the AAA, noted that in July, Buffalo Niagara set an all-time record average price of $4.27 a gallon, about the same as many other parts of the state. New York City and Long Island set even higher record prices that same month.
But since then, a gap has opened between Buffalo and the state’s other metro areas.
At Polino’s Service Station at Delaware and Delavan avenues, Joanne D’Amico of Depew said she searches for the lowest prices.
“I always watch the gas [at Polino’s], especially because they are the cheapest in the area, even around my area,” said D’Amico, who works in Buffalo. “There’s maybe 3 cents difference, but 3 cents is 3 cents.
“I’d like to see it come down even further,” she added, “but I’ll take what I can get.”
Christopher Polino, the owner, said the past year has been his hardest despite the high gas prices.
‘Horrible year for me’
As an independent retailer, he must add 10 cents to 15 cents per gallon to the price he pays Goetz Energy, a local distributor, just to cover sales tax and credit card fees.
His profit margin, he said, typically amounts to pennies per gallon.
“A lot of my customers appreciate that I’m pretty low and try to keep it low,” Polino said. “There are times you have a chance to make 10 cents a gallon. If I don’t do this, I’m not going to survive,” he said.
“This year was a horrible year for me — there was times I didn’t make a penny for months,” Polino said. “To even cover my [costs], I would have to be a nickel higher than the guy across the street and price my self out.
“I had to hope what I was doing in [my garage] would cover my losses at the pumps.”
Polino, meanwhile, has reduced his hours, cut staffing in half and shut off the heat in the shop to save costs.
“I cut corners in every possible way. You see some profit, but it’s not what people think,” he said.
Polino said he is at a loss on why prices are so high in Western New York, but said the gasoline chains “set the tone for the neighborhoods.”
Until a year ago, that was Exxon Mobil with its network of company-owned stores and lessee dealers on many of the busiest corners. But Exxon Mobil has divested itself of its retail operations by selling off its stations to other operators, leaving Sunoco as the local market leader most able to affect price.
Sunoco corporate officials in Philadelphia were not immediately available to comment. Kathy Herrscher, who leases a Sunoco gas station at Maple and Sweet Home in Amherst, said she was unable to explain why gas prices are so high in Western New York.
“I would love to find out the answers myself. I’ve always felt the dealers have gotten hurt in this business. I know the oil companies have never been fair to distributors, the dealers or the public,” Herrscher said.
She said Sunoco “definitely has a role” in how much gas costs in the area, but she doesn’t know how much of a role that is.
“We’re just holding on by a string over here,” she said, citing $9,000 a month rent and electric bills that average $2,200.
“The whole thing is such a racket, and why Buffalo is like this I don’t know.”
Return to old habits
The upside to high gas prices has been the willingness of some people to change their buying habits.
At the Sunoco station at Delaware and Amherst, Danielle Blasz of Lancaster said she exchanged her truck for a car and now gets 10 miles more a gallon. At the Delta Sonic in Amherst, Jawan Hayes of the Town of Tonawanda said he has stayed closer to home to cut down on mileage.
Katalin Horvath McClure of Kenmore said she fears people will revert to old tendencies “out of laziness” if gas prices remain low. That, she says, would not be good for the environment or for pushing the country toward greener energy alternatives.
“I saw a lot of people on bicycles, and people were thinking twice about what kind of cars to buy. So there has been a good side to having high gas prices,” McClure said while getting gas.
Having grown up in Hungary, McClure said Americans don’t realize how well-off they are.
“Compared [with] the rest of the world, U.S. gas prices are always ridiculously low,” she said.
msommer@buffnews.com and mglynn@buffnews.com
