Cullman drivers seem to pay more for gasoline
Published 10:15 pm Thursday, December 15, 2005
In addition to the recent price hike, some local drivers are complaining that gas prices seem higher in Cullman than in other Alabama cities.
“The prices aren’t too bad, but they’re worse up here than they are in Birmingham,” said Amber Graham, a Birmingham resident who was fueling up at a Cullman Shell station on U.S. 31 on Tuesday.
According to the Web site www.alabama
gasprices.com, gasoline is slightly more expensive in Cullman than in its surrounding cities.
In fact, out of the five cities polled by The Cullman Times, Cullman ranked the highest, averaging $2.19 per gallon. Huntsville and Florence came in second at $2.12 per gallon. Decatur and Birmingham were the cheapest at just $2.10 per gallon.
The poll was conducted by searching the site for stations reported in the last 48 hours. Since the site depends on members to report the prices, it was impossible to poll every gas station in each city.
While the evaluation may not be entirely scientific, it does show a discrepancy.
Pete Williams, an associate professor of economics at the University of North Alabama in Florence, offered two possible explanations for the discrepancy.
“A lot of times it’s a red herring,” he said in a phone interview on Tuesday. “What seems like higher prices is actually higher real-estate values in a certain location.”
According to Williams, prices in areas with higher property costs are likely to have higher fuel costs. That is because the station owner must pay more to locate there.
In addition, he said another possible explanation was lack of competition.
In areas with there are fewer wholesale distributors, he said, competition tends not to be as fierce as it is in larger cities.
“Sometimes small markets are harder to police for special arrangements between dealers,” he said. “What likely happens though is that each one knows there will not be as much competition, so they are not as likely to lower their prices, even if their costs go down.”
Williams pointed out that special arrangements between dealers were strictly prohibited by U.S. anti-trust laws.
Bert Morgan, owner of Morgan Oil, a wholesale fuel distributor in Cullman, was reluctant to comment on the issue during a phone interview Thursday.
While Morgan did say that his fuel comes from a “tank farm” in Birmingham, which is fed via pipelines, he said he did not know how much, if any, the price had dropped for him.
“It goes up and down frequently,” he said. “You couldn’t answer that question because it didn’t go down all at once.”
As to the gap between Cullman prices and other cities, Morgan pointed out that those cities all have the added income of alcohol sales to lower their gas prices.
Morgan would not say what his profit margin was or how much fuel he distributes into Cullman.
“I don’t really feel qualified to let this go any further,” he said.
While it is not exactly clear what prices will do next, the Energy Information Administration predicts crude oil prices per barrel will slowly rise through 2006.
By the year 2014 they predict it will cost $54.08 per barrel, but only after following one more time.