UPDATED January 2, 2013

 

What Can Make Motor Fuels More Expensive?

Southern Maine Gasoline Prices

Who Sells Motor Fuels in Maine?

 

 

What Can Make Motor Fuels More Expensive?

 

  • Congress - Prohibiting exploration, production and refining can only serve to reduce supply in the US and increase volatility and dependence on foreign governments.
  • Speculators - Institutional investors in commodities markets specifically Corporate and Government Pension Funds, Sovereign Wealth Funds and other Institutional Investors now account for  a larger share of the outstanding commodities futures contracts than any other market participant. These parties have no reason to to care about the underlying commodity - only the price and that the price increases. When a Maine company needs oil to sell to AMine citizens, they must compete with the institutional investor thus the price goes up dramatically.
  • Obamacare. The costs associated with Obamacare to business owners will have to be added to teh prices of goods.
  • those who believe we should tax motor fuels as Europeans do, making the average price $6.00 per gallon or more.
  • those who want to undedicate the State Highway Fund from the Constitutional protection it now has, allowing motor fuel excise taxes to be used for general spending unrelated to roads and bridges.
  • those who advocate unproductive regulations - requiring boutique (40 different types) fuels for example, which make selling motor fuels more expensive.
  • when the federal minimum wage was increased, remember that the minimum wage might not be earned by most workers - but the federal minimum wage does serve as a benchmark for wages for employees. As the federal or state minimum wage rises, so does the expectation of employees for their own wages.
  • Decreased supply, increased demand: There have been no new refineries built in the US in 25 years. Primarily due to environmental regulations and local opposition. Couple that with prohibitions on drilling almost anywhere in and around the US and we have more demand and no new supply = higher prices.

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What Goes Into The Price Of A Gallon of Gasoline [in Southern Maine]?

 

Average branded Wholesale Price, as reported by OPIS
South Portland Terminals, December 28, 2012

 

Unleaded Regular / 9.0 RVP ethanol 10% Gasoline

 

Avg Wholesale Price Paid by Dealer: OPIS
(data from Oil Price Information Service)

$2.93

State and Federal Excise Tax:

  • Maine excise:$0.30
  • Federal excise:$0.184

Maine environmental fee: $0.015

TOTAL Tax:

$0.499

Transportation
So. Portland to Augusta, for example:

$0.05

Subtotal so far: $3.48 just to get to an Augusta retailer - before any dealer mark-up

$3.48

Service Station Expenses: (example only gross margin)

  • mortgage or rent
  • property taxes
  • payroll
  • payroll taxes
  • utilities
  • workers comp & benefits
  • maintenance
  • state and federal regulations
    • environmental
    • health & safety
    • hazardous materials

Insurance

$0.20

Credit card fee (2% of sale goes directly to credit card company)

$0.07

TOTAL example price:

$3.75

 

OPIS - December 28, 2012 South Portland, Maine average retail price: $3.46.

*Credit card companies make more per transaction than the C-Store selling the gasoline.

 

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Who Sells Motor Fuels in Maine?

 

When you're driving in Maine and see a CITGO Station, or Mobil station, chances are you think you're buying directly from those companies. For the most part, since the 1970's, that is no longer true.

 

For much of the past 30 years the so-called "major oil companies" have left Maine for more profitable pastures. The average service station in Maine sells about 750,000 gallons of gasoline in a year. Most of the "major" oil companies seek stations which sell 2 million or more gallons per year.

 

So when you pull into a Mobil station in Maine, chances are that station is really owned and operated by a company such as the C.N. Brown Company of South Paris, or the R.H. Foster Company of Machias. The CITGO station is likely owned and operated by someone like the Maritime Energy Company of Rockland. Most of Maine's 1,400 service stations are owned and operated by Maine companies who lease the right to use a major oil company brand name and sell that major oil company's products.

 

Maine's service stations are predominantly owned by and operated by Maine citizens.

 

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