Gas Retailers Fear Further Price Drops

Article excerpt

Despite the lowest pump prices in years, gasoline retailers are operating on minimum inventories for fear further drops in wholesale prices could stick them with tanks full of high priced gas.

Street prices have dropped as low as 69 cents to 71 cents for regular, but they have not dropped as fast as wholesale or "rack" prices, area retailers and jobbers reported.

Retailers have a profit margin even at 71 cents a gallon for regular - the lowest price at any stations operated by Onan Oil Co., said Virgil Onan, president.

Most of his stations are selling regular at about 73 cents a gallon, he said, with a penny or two more for unleaded.

"We've still got a margin," Onan said. "But you don't want to buy too much at today's prices, because you might get a better deal tomorrow. You could get stuck with an inventory at higher prices that is tough to move.

"Wholesale prices are going down so rapidly that it's hard to tell exactly where you're at."

The "rack" prices are as low as 43 or 44 cents a gallon before 19 1/2 cents in taxes are added, according to area jobbers.

Even with transportation fees and distributor's mark-up, retailers say they are making money at the low prices. Only last January, there was concern that price wars around 90 cents a gallon in the Oklahoma City area would force prices below dealer costs.

Today, self-service prices average around 73 cents in most areas for regular. Some stations are selling it at just under 69 cents a gallon, said Gary Dragma with Conoco Inc. …

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