Gas prices expected to drop
After about two months of less-than-favorable gasoline prices in South Lake Tahoe, residents can look forward to a slow but sure decline in the near future, local service station owners said.
The scene in Tahoe has mirrored what’s been happening throughout the country since late July. The per gallon prices began rising even though the cost of crude oil has remained steady.
Al Moss, owner of Al’s Chevron Way and Emerald Bay Chevron in South Lake Tahoe, said the phenomenon is simple supply-and-demand economics.
When the supply of gasoline is low and the demand is high – like during the summer driving season – companies like Chevron and Shell raise their prices to local gas stations, who in turn pass the increase on to the consumer, Moss said.
While this trend is fairly traditional, this year’s increase seemed to be even more drastic due to some outside circumstances that caused an even greater shortage of supply.
“This is just hearsay, but I heard that California found itself with an excess of gasoline and sold it to other markets,” said Chris Cefalu, owner of Fox Unocal Service Station. “When the driving season came up, they didn’t have the excess, which cut short the supply and drove prices up. That might cause prices to stay up longer in the fall.”
The converse is also true, which is why consumers will see a price drop later in the fall.
But other factors unique to South Lake Tahoe, such as its tourism economy and geography, cause prices to be slightly higher – or to decline slower – here than elsewhere.
“One thing I can assure you is you will probably see the price go down outside of the basin before it goes down inside the basin,” Moss said.
The reason is not because local businesses are trying to make more money, but because the large oil companies sell the product at different rates in different markets, he said.
“We are usually the first to go up and the last to go down – Chevron responds that way to this market,” Moss said.
But Cefalu said the price per gallon of gas in Tahoe is not far off from other areas in Northern California. The average price right now in Sacramento is $1.45 and $1.51 in San Francisco, he said. A quick drive up and down U.S. Highway 50 from the “Y” intersection to Stateline reveals that the average price here is about $1.46 per gallon of regular unleaded.
“To bring the gas up here we pay more freight, so the farther away you are from the distributor the higher your prices will be,” Cefalu said.
He added that the price of gas is not the responsibility of the local gasoline vendor, as prices are dictated by the major oil companies.
“It’s not the dealer – those prices are just a reaction to the price of gas,” he said. “Even though the price of gas is high, dealers may not be making much at all. It’s a very competitive market.”
A manager at Round Hill Shell station agreed.
“We make the same on gas whether the price goes up or down,” he said. “The prices fluctuate – there’s so many things that influence it.”
The average cost of gasoline on Friday was $1.3089 per gallon, according to the Lundberg survey of 10,000 stations nationwide, down 1.29 cents in two weeks.
“Supply came up and demand came down,” said analyst Trilby Lundberg. “Gasoline price cuts are already occurring in the Midwest and the East and prices are now peaking in the West and gulf regions.”
Both Moss and Cefalu agreed with that projection, saying customers should see a drop at some stations in the next couple of weeks.
“It will probably go down,” Cefalu said. “Gas has been at a price where it really can’t go much higher.”
Associated press contributed to this article
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