Volume, location both play roles in determining local gas prices

Whenever the cost of gas spikes, it's common to hear complaints that those prices are much higher in Dodge City than in other Kansas cities.
    But that may not always be the case.
    A spot check Monday of gas stations around town showed that regular unleaded cost $3.43 per gallon at the Flying J Truck Stop, 2524 E. Wyatt Earp Blvd.; $3.45 at the Kwik Shop convenience store at 14th Avenue and Wyatt Earp Boulevard; and $3.49 at the North Central Service station, 2017 Central Ave. The statewide average price for regular unleaded fuel was $3.48 per gallon on Monday, compared to an average price of $3.50 per gallon in Dodge City, said Jim Hanni, executive vice president of public and government affairs for AAA Allied Group in Topeka.
    Hanni said the city with the lowest gas prices as of Monday afternoon was Wichita, where the average price for regular unleaded was $3.46 per gallon.
    "That could be just the presence in Wichita of larger bulk purchasers of fuel, such as maybe a Hypermart or Wal-Mart," he said in a voicemail message.
    Flying J general manager Shane Snook said in his experience, a city's distance from "the rack" — the terminal where fuel trucks pick up loads to deliver to retailers — is the key factor in determining the price at the pump. He added that as a general rule, the cost of gas in Dodge City is higher than other cities because the nearest rack is in Emporia.
    "Because we're basically smack-dab in the middle of nowhere," Snook said.
    A city's distance from "the rack" is certainly one factor in the price of gas, said a local distributor who asked that his name not be used. But he added that other elements, including availability, sales volume and the retailer's buying power, also come into play.
    For example, assume that the rack price for regular unleaded fuel is $282.40. Add state and federal taxes, an inspector's fee and other expenses, and the retailer's cost rises to $336.21.
    Then assume the retailer sells the fuel for $3.49 per gallon, the distributor said. If the buyer uses a credit card like Mastercard or Visa make the purchase, the retailer must pay an additional 2.5 percent fee. (That fee does not apply to purchases made with cash or a gas card.) That cuts the actual sales price to $3.41 per gallon, resulting in a net profit of .875 cents.
    If the retailer sold 1,000 gallons of gas in a day, his or her profit would be $87.50.
    The distributor said the belief that retailers are gouging consumers is a misconception.
    "It looks like the little guy's screwing the public, but he isn't," the distributor said.
    He added that fuel prices are constantly fluctuating, making it difficult to compare them from city to city.
    A southwest Kansas man who did not want his name used said he thought the perception that fuel prices were unusually high was rooted in the fact that consumers see those prices every day.
    "Most people squawk about the price of gas because they see it posted every day and can compare prices by driving by," he said. "When if you look at the price of a loaf of bread, the price varies tremendously between the different brand names and the different stores, and people don't complain about that."
   
    Reach Eric Swanson at (620) 408-9917 or e-mail him at eric.swanson@dodgeglobe.com.