New York State Exposed: Gas prices -- where is your money going?

Posted at: 12/12/2013 6:38 AM
Updated at: 12/12/2013 6:23 PM
By: Scott Kilbury

For the first time in more than nine weeks, the price of gasoline went up last month. Even though the cost to make the fuel typically goes down this time of year.

Because of state taxes, gas in New York is consistently the highest priced in the nation, but it's also inconsistently priced from one community to the next.

In our travels throughout the Rochester area this week, we saw gas going for a wide range of prices. Downtown, it was listed at $3.61 per gallon. In Webster it's was $3.65 and $3.69 in Fairport. The lowest price we found was $3.47 in Henrietta at Sam's Club.

Motorist Kevin Koss was paying $3.73 per gallon, but knows where the better deals on gas are in Henrietta.

"Normally, I'm at one of the discount warehouses, but I was too low on gas. I quickly calculated what I'm going to have to pay extra here, but I have to do it."

And, if you buy gasoline in Greece or Webster -- chances are you'll pay more than if you bought it in Henrietta.

Bill Adams, of the New York Association of Service Stations says, "So, if gas is much lower in Henrietta say instead of Webster. They'll price it lower in Henrietta and make up for it in Webster. Overall they're making a profit but losing gas in one location."

Adams owns two area stations and he represents the state Retail Gasoline Dealers Association. He knows those buying fuel from a wholesaler have an advantage.

Adams tells us, "What happens is you have multiple locations, the Sam's Clubs and BJ's of the world. They'll sell gas cheaper in Henrietta, maybe below cost, but they make up for it in other locations and they cost average the price of the gas out."

This is a prime example of zone pricing for gasoline. One specific area will have higher prices and just ten minutes down the road, the prices are much lower.

BJ's in Henrietta keeps its price low to compete with the other wholesalers. But BJ's in Webster can charge $0.15 more because there isn't another wholesaler. So, their price still looks like a good deal because it's competing with the stations who get their higher priced fuel from a distributor.

In 2008, the  zone pricing law was passed by the state legislature. It was intended to even out prices at the pump by prohibiting "the arbitrary price differences within the relevant geographic market."

Koss says, "I try to get to those places for the savings i wonder why the difference."

The attorney general's office acknowledges zone pricing exists, but in this 2011 report, admitted it can't enforce the 2008 law prohibiting it. The language of the 2008 law needs to be amended.

For New York to have an effective zone pricing law, the statute must be amended by the state legislature. Key terms such as "relevant geographic market" and "zone pricing" must be clearly defined.

Assemblyman Fred Thiele says, "The intent was to do away of zone pricing, but the first  attempt unfortunately got watered down by the opposition from the major gasoline companies."

Thiele is an independent assemblyman from downstate. He introduced legislation earlier this year to amend the current zone pricing law to include retailers and distributors and just limit it to wholesalers.

We asked Thiele, "Do you think the fact it was watered down that somebody lobbied toward them to say can we change the language up here?"

"I don't think there's any question about it. You think there were influencing factors? This is one of those cases where the public interest has to ultimately triumph over the special interest."

Assembly Minority Leader Brian Kolb understands why the legislation might be met with some opposition.

Assemblyman Kolb says, "This is not about politics, I don't think so at all, whether it's in the Senate or Assembly. I think really it's the difference is this the right solution for the problem that we're encompassing. I think that sometimes legislation is not the best answer."

So, if you fill up in Henrietta say at a rate of 10 cents less a gallon, that's a saving of two dollars on a 20-gallon tank. If you gas up once a week, that's $120 per year, take away the membership fee from BJ's or Sam's and you still have enough for another tank and a half of gas.

Koss says, "It's necessary I try to keep it in perspective. People still pay a buck for water, where a gallon of gas will get me 26 miles. I'm not willing to walk for four dollars, so it's still a value."

The proposed amendment to the price zoning will be up for vote in the Spring.