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The Petroleum Predicament

Many factors contribute to making gas prices in Tahoe/Truckee some of the highest in the nation
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The livin’ may be easy, but petrol prices can be a summer bummer. One of the least attractive components of summer — when gas is historically at its highest — is when the chariot runs out of fuel, and prices at the pump seem exorbitant.

It’s a reality that hits Tahoe hard. Although gas prices are lower than average across the country going into this summer, our region is in the top tier for gas prices in the nation, according to GasBuddy, a company that reports on fuel prices using crowdsourcing. On June 1, just 0.9 percent of gas prices in the nation were more than $3/gallon for regular unleaded, and only 0.3 percent of gas cost more than $3.25. On that day, prices in Tahoe/Truckee ranged from $2.99 on the lowest end at the Transam station in Kings Beach to $3.39 at various stations along Highway 89 in Tahoe City and Truckee.

In comparison, for the same day, a 76 station in San Francisco’s North Beach district was at $3.29/gallon, the price in Carson City was $2.31 gallon, and the average for the country was $2.33/gallon. The average across California that week was $2.87/gallon.

People in Tahoe are struggling to pay what is the upper one percent of fuel prices in the nation, and are naturally curious about why they are this high. But are these rates unfairly inflated, or appropriate for the region based on gas price structuring?

Allison Mac, a West Coast petroleum analyst, believes that one of the biggest pricing factors in a region like Truckee is convenience. “In general, gas is a convenience purchase; people won’t shop around for gas, so to speak, so with a high-visitation area like Truckee that is right off the highway, consumers will pay the going rate,” she said.

Fuel in our area is hauled up from Bay Area and Sacramento refineries, and gas stations are charged a transportation fee as part of their costs from their supplier, leading some to wonder why the Kings Beach Chevron station is consistently cheaper than retailers in Tahoe City or Truckee, when Kings Beach is farther off the highway. Mac believes that the difference in additional transportation costs for the extra mileage to Kings Beach compared to that of Truckee is negligible.

“Transportation to the pump is absolutely a part of gas prices, but convenience and other factors such as cost of living where the gas station is located likely outweigh the additional transport fee,” Mac said.

LOCAL KNOWLEDGE

The majority of gas stations — 58 percent of the estimated 152,000 in the country — are licensed to an individual owner, according to GasBuddy. A brand like Chevron is not setting the prices for its stations, leaving that decision to the operators.

It is possible our prices are affected by the mild consolidation in this area. Cox Family Stores owns the Shell stations in Truckee and Tahoe City (as well as a half dozen more throughout California), and an individual proprietor owns the 76 station near Donner Lake, downtown Truckee, and the Circle K in Incline Village.

While gas station employees are legally bound to not disclose what they pay for their gas, the Truckee Tahoe Airport — as a public entity that sells airplane fuel — isn’t. Kevin Smith, the airport’s general manager, said he pays $2.30/gallon for jet fuel, which is very similar to automobile diesel. He admits to charging a premium for it, and the price to the consumer comes out to $4.46/gallon. At time of press, local stations were selling diesel for around $3/gallon, which could potentially give an idea of the rate of markup for diesel if local gas stations are paying a similar rate, although diesel is only a small part of U.S. fuel volume and doesn’t explain the majority of the market.

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Reader comments so far...

Truth | Truckee
Was this expose in support of price gouging paid for by the local station owners? But seriously, you should did a little deeper. An apples to apples comparison is south lake, where prices are almost a dollar cheaper. How is gas 40 cents less in places with no competition, like kingvale, sierraville, and bassetts? Competition drives prices down. Here we have no competition, we have collusion. The shell by donner lake sets the price, and every station in the area calls them and sets the same price. A quick look at the phone records by the d.a. would figure that out pretty quickly...

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March 14, 2019