Tuesday, February 25, 2003
Copyright © Las Vegas Review-Journal

State ranks third in cost of gasoline

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Escalating crude oil prices, the relative isolation of Nevada and an assortment of taxes have combined to give Nevada the dubious distinction of having the third-highest average gasoline prices in the country, according to AAA Nevada.

The price of unleaded, regular self-service gasoline in Nevada on Monday averaged $1.79, according to the association. Only California stations with an average price of $1.93 and Hawaii at $1.90 charge more for gasoline, said Cynthia Harris, an AAA spokeswoman.

"It's pretty amazing to watch what's going on right now," Harris said.

Part of that relates to Nevada's almost total reliance on California for gasoline, but AAA also saw the average price in Nevada increased 14 percent over the last month, compared with an 8 percent increase nationally.

Areas of the country east of the Rockies rely on multiple sources of gasoline, said Peter Krueger, executive director of the Nevada Petroleum Marketers Association.

"We are an island out here, and that creates more problems," Krueger said.

Taxes are the "biggest reason" gasoline prices are relatively high in Nevada, he said. The state gasoline tax is now 23 cents a gallon.

However, the Regional Transportation Commission in Clark County and its counterpart in Washoe County are proposing a change in local taxes. The RTCs are expected to get a bill filed to make the tax on gasoline fluctuate with inflation, Krueger said.

"We're not excited about that," Krueger said.

State and local taxes on gasoline in Clark County already total 33 cents a gallon, he said. Federal taxes bring the total to 46.2 cents.

But Krueger defended gasoline station operators.

"No one is price gouging," Krueger said. "Your friendly gas station is likely to make a nickel a gallon." He said the nickel covers some overhead costs, such as electricity.

"Nobody is making money in gasoline," he added.

But in California, dealer costs and profit margins have increased some in recent weeks, according to the California Energy Commission. Dealer costs and profit margins include costs associated with distribution, retailing, franchise fees, rents, wages, utilities and other factors, according to the California agency.

Also affecting prices are the March changes in gasoline blends. California refineries change their blend at this time of year so the fuel will burn better during the summer and this typically causes prices to increase, analysts said. Also, California refiners this year are required to switch to ethanol from methyl tertiary-butyl ether because MBTE was affecting water supplies, Schlichting said.

Uncertainty over Iraq and the Venezuelan oil strike that ended Feb. 4 are affecting crude oil prices, analysts said.

In Venezuela, "it's going to take virtually three to four months to get back to the level they were before the strike," Harris said.