Tuesday, December 13, 2005
N.M.'s Steep Gasoline Prices Leave Experts at a Loss for Explanations
By Rosalie Rayburn
Copyright © 2005 Albuquerque Journal; Journal Staff Writer
New Mexico has made a rapid climb this year to a top-five national ranking.
Unfortunately, it's on the state-by-state list of highest gasoline prices.
The statewide average of $2.28 for a gallon of regular unleaded on Monday left us trailing only Hawaii ($2.65), Alaska ($2.56), New York ($2.35) and California ($2.30).
The short answer is there is no short answer.
Ruben Baca, executive director of New Mexico Petroleum Marketers Association, said he's at a loss to explain it.
"I don't know why the cost is higher to us here," he said.
Baca said he's been asked that question so many times he's tired of trying to offer an answer.
Only 11 months ago, New Mexico was the 28th most expensive for average gasoline prices nationwide, according to AAA New Mexico.
State residents who have taken road trips recently have been taken aback by the lower prices at pumps in most every state beyond our borders. Two border states, Utah and Oklahoma, had the nation's cheapest gasoline Monday.
Journal reader Sandra Fowler said she was outraged when she saw pump prices 60 cents to 67 cents less in Oklahoma, Kansas, Iowa and Nebraska on a trip last month.
"One must ask, what gives in this state?" Fowler wrote in a letter to the Journal.
A spot check at AAA's www.fuelgaugereport.com Monday showed our neighbors are getting better deals at the pump.
Some average prices: Oklahoma, $2.05; Missouri, $2.06; Arkansas, $2.10; Texas, $2.12; Colorado, $2.19; Arizona, $2.23.
Those are statewide average prices; plenty of stations charge much lower prices.
Prices at some stations in the Midwest and Texas have dipped below $2.
Members of Baca's association, who buy the gasoline that is eventually sold at retail outlets, have to pay what wholesalers such as Valero, ConocoPhillips and Giant Industries charge.
And they won't give out pricing information.
Analysts who study the national market cite several factors that cause gasoline prices to be higher in some states than others.
Special fuel mix requirements;
Competition among gasoline suppliers in the local market;
Volume of product sold;
Distance from major crude oil processing facilities.
All influence prices, said Michael Burdette, senior analyst with the federal Energy Information Administration.
State taxes don't explain our high prices.
Figures from the American Petroleum Institute in Washington, D.C., show New Mexico's state gasoline tax is 17 cents per gallon, the same as Missouri, but lower than Nebraska (25 cents), Kansas (24 cents), Iowa and Texas (20 cents each).
Special gasoline mixes aren't a factor either.
Albuquerque is the only area that requires special fuel additives and only for a few months during the winter, Baca said. Stringent emissions laws in California require additives that help keep its prices among the highest in the nation.
New Mexico's distance from major oil refineries along the Gulf Coast may be the biggest factor, said American Petroleum Institute chief economist John Felmy in a phone interview.
"You're relatively at the end of the supply chain in New Mexico," he said.
Leland Gould, executive vice president of Giant Industries, which refines and sells gasoline in New Mexico and Arizona, agreed with that explanation.
States such as Oklahoma and Texas produce huge amounts of crude oil. They have vast refinery capacity. And they have more pipelines that get the crude to those refineries.
Utah, which had the lowest prices, has five refineries.
Texas has 23 refineries that can process 4.6 million barrels daily.
Southeastern New Mexico produces oil in the Permian Basin. And we have three refineries, one near Artesia, one near Gallup and one near Bloomfield. Their total capacity is 112,600 barrels of crude oil daily.
The Gallup and Bloomfield refineries only operate at about half capacity, Gould said, because there are no pipelines linking them to crude suppliers.
"Crude has to come by tanker and that's more expensive than pipelines," he said.
That also explains why prices are higher in central and northern New Mexico and in small rural areas, Gould said.
"Santa Fe is nearly 200 miles from the nearest refinery and all its supplies have to come by truck," Gould said. High real estate prices and property taxes also push prices up in the Santa Fe area, he said.
Prices are slightly lower in southern New Mexico because retailers can get gasoline supplies by pipeline from refineries in El Paso and another in the West Texas town of Big Spring.
Eastern New Mexico towns enjoy lower prices because of their proximity to Texas.
For example, pump prices in Clovis are lower than Albuquerque because they have to be competitive with lower prices in Texas, Gould said.
1. Hawaii $2.65
2. Alaska $2.56
3. New York $2.35
4. California $2.30
5. New Mexico $2.28
50. Utah $2.00
49. Oklahoma $2.05
48. South Carolina $2.05
47. New Jersey $2.05
46. Missouri $2.06
Source: AAA. Prices are average for a gallon of unleaded regular gas. Prices as of Monday.