Gas prices rise with the mountains
Mountain residents have expressed dismay in recent weeks about the price difference of unleaded gasoline between Denver and the High Country.
But don’t tell that to Ron Schweikert of Louisville. He pays about $1.55 a gallon on the Front Range, and paid 4 cents more per gallon on a recent weekend in Frisco.
“You have to take into account what it takes to get the gas here,” he said. “Everything’s a little higher in the mountains. Sixty cents more and we’re up here? It’s not an issue with us. To come up to a place like this is worth the extra nickel.”
Others know it could be worse.
“Come to Illinois,” said a man who declined to be named. “This is cheap. You’ve got mountains and cheap gas to boot.”
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He said he pays $1.79 to $1.89 per gallon of gas, bringing his monthly gasoline bill to $300.
People who buy gas in Glenwood Springs pay $1.71 for a gallon of regular unleaded gas. Gas up in Vail, and you can expect to pay an average of $1.89. And in the past month, California’s average gas price has jumped 17.4 cents to $1.87 a gallon.
“The challenge in the mountain communities is that there is a lot less competition,” said Mary Greer, spokesperson for the American Automobile Association, which compiles average gasoline prices from throughout the nation each week.
“Also, there are some additional costs involving transporting fuel into the area, and the cost of doing business is a little higher,” Greer said. “$1.61 is not out of line.”
Today’s prices are comparable to those last February, but at that time, they were inflated due to concerns about the United States heading off to war. As soon as the war started and prices stabilized, they started to go down again until the summer driving season, Greer said.
Drivers should expect to see higher prices again this summer, primarily because crude oil prices haven’t been below $30 a barrel in months, and OPEC has just decided to cut back production by 1 million barrels a day beginning in April.
Industry analysts say the agreement is really a method of achieving tighter compliance with previously agreed upon production quotas, since some countries have been overproducing, the AAA reported. OPEC member countries – which produce about 40 percent of the world’s oil – are currently producing nearly 26 million barrels per day. Word of the agreement pushed oil prices above $33 per barrel.
Prices could go even higher as refineries go off line to switch from winter to summer blends. According to Greer, the United States uses 14 different blends, each mixed to comply with the different emission and air quality standards in each state.
Other factors that affect gasoline prices include weather, pipeline breaks, the economy and refinery fires. For instance, in 2001, Greer said, a pipeline providing gasoline to Chicago and St. Louis broke, forcing those cities to cut back sales of excess fuel to Colorado. Prices in Colorado soared to $1.81.
This winter, deep freezes on the Eastern seaboard forced refineries to convert more crude oil to heating oil instead of gasoline. Supply and demand subsequently resulted in higher gasoline prices.
Colorado imports 65 percent of its gas – the United States as a whole imports 63 percent – making the nation dependent on global situations.
And even when something does affect the market, retailers tend to hold off on price increases until their profit margin gets too narrow, at which point it will take a noticeable jump.
“Colorado is more price sensitive, too,” Greer said. “We tend to react quickly when things happen. When (there’s a price increase), the consumer looks at the retailer. But they’re just passing on the cost increases to the consumer. Hopefully things will settle down soon.”