Gas prices down some;future still uncertaindown some;future stilluncertain

Published 5:00 am Friday, June 22, 2001

Gas prices have dropped slightly during the last month, butlocal gas services warn the market is still fluctuating.

Prices soared in past months by a 31-per-cent-a-gallon averagenationwide and 43 cents in the Midwest as a result of supply andrefinery problems, according to the Energy Department, but began todrop this month as those problems were overcome.

“I don’t think it will get to the two dollar level they werewarning us about,” said Kevin Matthews, plant manager for BuffaloServices, Inc.

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Problems among the refineries caused the price surge, Matthewssaid. The refineries were operating at 97-98 percent efficiency andwere unable to increase the tempo when several refineries had tostop production because of weather damage or other disruptions intheir operations.

Some of the refineries have since been put back into productionand gas prices should begin to decrease. Barring any furthercomplications at the refineries, Matthews said, the market shouldcontinue to improve.

The situation was not as bad locally as people believe, Matthewsaid.

“We’ve been lucky here,” he said.

He said prices here were lower than the national average andquoted a price of $2.50 a gallon in California.

According to the American Automobile Association, the nationalaverage on June 13 was $1.65 for regular unleaded. The stateaverage on the same date was $1.51.

Prices in Brookhaven that week ranged from $1.45 to $1.59 withmost businesses setting a price of $1.49, according to anunofficial survey conducted by The DAILY LEADER. Monticello pricesheld an average of $1.43.

The variance in prices among even neighboring towns is notunusual, Matthews said.

“It’s market oriented,” he said. “Whatever the market will allowthat is what they charge. There are usually places (across southMississippi) selling for seven to eight cents less and placesselling for seven to eight cents more” than Brookhaven, hesaid.

The level of competition among retailers and their marketingstrategy tends to set the prices locally, Matthew said.

He used Hattiesburg as an example. Matthews said Hattiesburgsells gasoline nearly at cost in order to attract customers intothe convenience store part of their operations. There are very few”mom and pop” retailers in the city, he said. It is dominated bythe big chains, which further advance their marketing strategy byselling in volume.

Matthews also pointed to the costs of distribution as a factorin determining local costs. Using Hattiesburg again, he said theycan sell gas at a discount of one to two cents less because theyare a hub of gasoline distribution and do not have the distributioncosts outlying areas do.

Time of year was also a factor in the recent surge in gasprices.

Gasoline prices traditionally increase with the approach andduring the heavy summer driving season, according to the EnergyDepartment.

Other local gasoline suppliers were contacted for comment, butthey failed to return telephone calls.