Why is the price of gas higher in Rexburg than it is in Idaho Falls or Pocatello?
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IDAHO FALLS – Lower gas prices have been a welcome relief for drivers throughout eastern Idaho over the last month.
As of Jan. 29, AAA Idaho reports Gem State fuel prices have fallen another 8 cents in the last week, compared to a slight increase nationwide. Idaho’s average price for a gallon of regular unleaded is $2.89, ranking it 29th in the country for most expensive fuel.
Some have said the lower prices are an attempt by President Joe Biden to win votes ahead of the upcoming election. But Matthew Conde, AAA Idaho spokesman in Boise, credits the plummeting prices to “consistent production in the refineries” and a decrease in demand due to lower temperatures.
“Supplies have been boosted in our region over the last three or four weeks, which has definitely been helping as far as driving prices down,” Conde tells EastIdahoNews.com.
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As the national average inches up, he anticipates seeing an increase in pump prices in the coming weeks amid rising crude oil prices.
“Right now, we’re pushing around $77 per barrel, which makes up more than half the price of gasoline,” Conde explains. “It’s going to be more of a ripple effect over the next several weeks once that more expensive crude starts making its way through the system.”
Regardless of current market prices, there is always some fluctuation at the pump from city to city. The average pump price in Pocatello, as of Jan. 29, is $2.39, compared to $2.41 in Idaho Falls and $2.79 in Rexburg.
Those price differences, according to Conde, stem in part from competition among major retailers like Walmart, Sam’s Club and Costco to keep prices as low as possible.
“Some retailers have dropped prices down in an effort to be a magnet (for attracting new customers),” Conde says. “That’s one thing we looked at a couple years ago (to try and understand the fuel market). Prices in Idaho Falls were significantly cheaper than Pocatello at that point and we were trying to figure out why.”
Lennis Tirrell, who owns Ammon Speedi Mart at 3490 East Sunnyside Road, is a Sinclair dealer who buys his fuel from Conrad & Bischoff in Pocatello. Tirrell sets fuel prices based on “the street cost,” which comes from freight prices and competition costs.
“What happens is (service stations) get in a little price war, each one of them trying not to lose business and prove to their customers they’re trying to take care of them,” says Tirrell. “Pocatello is usually quite a bit more expensive than we are and we have to pay for fuel to be shipped from Pocatello out of the pipeline.”
As of Monday, Tirrell says the current cost of fuel is $2.42 a gallon but he’s only charging $2.34, which means he’s losing money.
“It’s been that way through the weekend,” Tirrell says. “For the last four or five days, I’ve lost 8 cents a gallon.”
Tirrell says he will often lower prices at his own expense for a short time to help out customers. The price at Maverik across the street was $2.49 on Monday, so Tirrell will be raising prices again soon.
But while some service stations are willing to lose money on gas, others can’t afford to do that.
Brad Orme owns Brad’s Exxon at 6 East Center Street in Sugar City. He says he couldn’t survive without making money on fuel purchases.
Orme declined to say how much it’s costing him to buy fuel right now, which he gets from Berry Oil in Idaho Falls. But pump prices were at $2.79 Monday, 38 cents higher than in Idaho Falls.
“There’s always a lag between wholesale (which is rising) and retail (which is decreasing). That’s the time when we can make a little bit of a profit margin because inevitably what happens is that reverses,” Orme explains. “In about two weeks, I’ll be making very little on my gas again.”
He believes the weekend Drone strike in Jordan that killed three American troops will cause gas prices to go up in the near future.
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Conde says the reason prices are a little higher in Rexburg and the Upper Valley likely has to do with the extra driving distance for tankers delivering it.
“There’s probably a little bit more of a delivery cost involved,” says Conde.
Meanwhile, Utah and Wyoming currently have the cheapest fuel in the nation. AAA reports the price in those states is $2.64 and $2.63 respectively. Typically, Conde says Gulf Coast states have the lowest fuel prices, so it’s unusual.
Though he isn’t sure why the Beehive and Cowboy State are leading the way, he says it’s good news for Idaho.
“Utah supplies most of Idaho’s gasoline and so if they’re doing that well, then hopefully there’s room for us to drop as well, at least in the short term,” he says.