Dear Mr. Know-It-All:
What’s up with these #@&! gas prices in San Juan County?!
Signed,
Penny Pincher
Revvin’ Ralph
Peter Passer
Coastin’ Carl
(Columnist’s note: A summary of letters from several readers, edited for clarity.)
Dear All:
Yes, your friendly Mr. Know-It-All is going to dip his toe into the controversial black-ooze topic of gas prices, in an attempt to explain what goes into setting the price of gas, and what’s being done about local prices that seem to be unusually higher here than other places. Mr. Know-It-All has been gathering information for several weeks about this issue. Let’s hope we can all still be friends at the end of this week’s column.
According to the American Petroleum Institute, the price of a gallon of gas in the United States is determined by four main factors:
Almost half the price (47%) is the price of crude oil. As you probably know, oil is a globally traded commodity, so even though the United States is a top producer of oil, the price is determined by the global market. As of July 23, the price for West Texas Intermediate Crude was $92.16. That’s why when you read in the newspaper that the price of oil is up (or down) the change eventually is reflected in the price we pay at the pump.
Refining the oil is 16% of the price. That is the process of turning the oil into various grades of gasoline, such as mid-grade and premium. We certainly seem to have a shortage of oil refineries in our area compared to a decade or two ago. Currently, we don’t have any refineries, so all of our gasoline has to be transported into the area, which is part of distribution and marketing costs. Those items make up 20% of the price of a gallon of gas. Remember that when you see an advertisement for your neighborhood convenience store and gas station.
The final component that goes into the price of a gallon of gasoline is, you guessed it, Federal and State taxes. That’s about 17% of the price. The Federal tax is currently 18.4 cents per gallon, and it’s been that amount since 1993 (that’s when Mr. Know-It-All was wearing flashy suspenders with his suits and ties). In all of his research, Mr. Know-It-All found that New Mexico’s gas tax hasn’t changed since it was set at 17-cents per gallon in 1995 (he was still wearing those trendy suspenders).
So, what with all of these numbers and calculations, would make the price of a gallon of gasoline so noticeably (and I do mean noticeably) higher in San Juan County than in the surrounding areas most of the time? Four years ago, this same issue caught the attention of Farmington Mayor Nate Duckett. He wrote to the New Mexico Attorney General and asked that his office look into the gas price issue here. That was four years ago. Four. Years. Ago. I spoke with the Mayor recently, who said there doesn’t seem to be an easy or uncomplicated explanation. More recently, high prices here have caught the attention of San Juan County Commissioner Sandra Lanier. Speaking on my KSJE radio program recently, Commissioner Lanier says she was shocked that, during a recent road trip to Gallup, she noticed gasoline prices were almost $1 cheaper per gallon in McKinley County than prices in San Juan County. She, too, has asked the New Mexico Attorney General to investigate our local prices.
My editor is throwing his eraser at me from across the newsroom, and that’s a sign that I am rapidly approaching the length limit of my column for this week. However, we have learned what goes in to determining the price of gas in each state, but it doesn’t account for the wide variations we can see from county to county in New Mexico. There is certainly more to tell about this combustible topic, so please watch this space for part two of the gas prices dilemma. I’ll share more about what Mayor Duckett and Commissioner Lanier are saying about local gas prices, and the official word from the New Mexico Department of Justice about their investigation.
Mr. Know-It-All is Scott Michlin, the general manager of KSJE 90.9FM community-supported radio at San Juan College. When he’s not answering questions here or on the radio, you might find him teaching public speaking or mass media classes at San Juan College, or serving on the board of directors for San Juan United Way, Presbyterian Medical Services, or the San Juan Symphony.
If you have a question about something in San Juan County, drop him a line at SMichlin@tricityrecordnm.com. If he doesn’t know the answer, he knows someone who does, and you’ll read about it here in the pages of the Tri-City Record!