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Old fashioned gas wars breaking out in Pierce County

Post by John Gillie / The News Tribune on Nov. 1, 2012 at 10:23 am |
November 1, 2012 3:44 pm

Gasoline retailers are at war in at least two two Pierce County communities — Bonney Lake and Lakewood — where gas prices dipped Thursday to as low as $3.27 a gallon.

That’s the price the Fred Meyer store on Highway 410 near 208th Avenue East and the Safeway at 410 and 214th Avenue East were charging Thursday for a gallon of unleaded regular. Two other stations along 410, an Arco at 208th Avenue East and an Arco at Old Sumner Buckley Highway, were both charging $3.31 a gallon or less to compete according to The News Tribune’s Gas Deal Finder.

In Lakewood along Steilacoom Boulevard, a Shell station at 83rd Avenue Southwest has posted regular for $3.29 a gallon. And three other stations in the vicinity, a 76 at Farwest Drive Southwest, a Pettit at Phillips Road Southwest and a Chevron at 74th Street West, were all selling regular for $3.31 a gallon.

In the Olympia area, gas prices are falling, but not quite as dramatically as in Pierce County. The lowest price was $3.39 a gallon at a Shell station at 2125 Caton Way and at an APP at 1312 Fones Road SE.

Those dramatically low gas war prices are being posted as the overall average price of gas in the Tacoma area continues declining steeply. In late afternoon Thursday, that price was $3.562 a gallon, down more than four cents in a single day. In the last week, unleaded regular prices in the Tacoma area have fallen more than 20 cents a gallon. In the last month, those same average prices are down 46.1 cents a gallon.

What’s behind those dramatically lower prices? Luke Xitco, president of one of Washington’s largest petroleum distributors, Tacoma’s Associated Petroleum Products, said those independent gasoline dealers, particularly those that are operated by supermarket chains, are using low gas prices as traffic builders for their retail operations.

Wholesale prices, as they do most every fall, have fallen substantially, said Xitco. Some dealers lag in dropping their retail prices in step with those wholesale declines, he said.
“This is when they can make finally make some money,” he said, “because there’s a 30-cent or so margin between wholesale and retail prices.

But other dealers, particularly those whose only business isn’t gas, will follow the wholesale price downward with their retail prices. That phenomenon is particularly true in locales where their competitors are lowering prices. Thus a gas war.

Xitco said he expects prices may continue to fall, but more gradually. or level out. The price the lowest price stations are now charging, he said, is close to what they’re paying.

Last year, average prices declined to $3.22 a gallon in mid-December before beginning to rise again.

In Bonney Lake, price made all the difference at gas stations along Highway 410. At midafternoon Thursday, stations selling gas for $3.69, $3.65 and $3.99 were without patrons while the price-leading Fred Meyer, Safeway and Arco stations hosted a full house of customers.

Lynn Conger of Buckley said she watches gas prices carefully, so when she saw Fred Meyer’s price, she decided it was time to fill up her big Chevy Suburban. She was paying $3.179 a gallon with a 10-cent discount with Fred Meyer card. She figured she was saving about $20 on her usual $100 fillup.

Jeff Estep brought his big, bus-like recreational vehicle to the station to fill its diesel tanks. He figured he was saving about 50 cents a gallon on his 50-plus-gallon fillup.

Paul Humphreys was paying just $3.129 a gallon using his Fred Meyer car discount, plus the credit card which he used would pay him a rebate on the gas he need to fill his red Toyota Camry.

“It’s nice to see gas prices finally coming down,” he said.

As recently as Oct. 8, the average price of gas in the Tacoma area was $4.12 a gallon, reports TacomaGasPrices.com.

The low price leaders, the Bonney Lake Fred Meyer and Safeway, are 85 cents below the Oct. 8 Tacoma-area average. That price difference means a motorist who bought 15 gallons at those price leaders today would pay $12.75 less than he would have for the same quantity of gas at the area average Oct. 8.

The dramatic local price reductions recently have finally put Tacoma-area average gas prices within striking distance of the nationwide average of $3.532 a gallon. West Coast prices normally are significantly higher than the national average because of higher gas taxes and a constrained local gasoline supply.

Fall typically is the time when gas prices dip the most as driving declines with the onset of bad weather. But this year gas prices haven’t followed time-honored patterns. Gas prices charts for the last 12 months look like a profile map of the Cascades with dramatic highs and lows connected by steep, quick changes.

This year,for instance, gas prices jumped in September as production problems in California affected the West Coast gas supplies. Those production problems are now behind. Early last spring, another time when gas prices are generally lower, prices in Western Washington jumped over $4 a gallon as a fire at the state’s largest refinery, BP’s at Cherry Point, curtailed production.

Once that refinery was back on line in late May, prices declined until mid-July when they bottomed out at $3.48 a gallon before beginning to inflate again as vacationers hit the road and a fire broke out in a San Francisco Bay area refinery.

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