Pumped up

When gas prices surged to $3 per gallon, Les Elliott knew he couldn't afford to stay retired.

The Havelock resident who had retired in 2004 began working full-time last month at the new Wal-Mart Supercenter on U.S. 70 West.

"You almost have to have a part-time job now" to buy gasoline, Elliott said. "Inflation is getting us - the retired folks, anyway."

On average, the going rate for a gallon of unleaded regular gas in the United States was $3.28 Tuesday, according to the American Automobile Association. Prices in Havelock ranged from $3.19 at Gray's Texaco to $3.29 at several service stations.

"It slows you down," said Elliott, a retired city worker. "You don't make separate runs. You try to work local and shop local. I try to make the gas go further. That's all you can do."

Consumers feel the pinch at the pump, but gas distributors and dealers are also hurt by the rising cost, said Mike Gray, owner of Gray's Texaco at U.S. 70 East and Ketner Boulevard.

Gray said he buys gas per tanker load and spends between $25,000 and $28,000 for 10,000 gallons. He sells the gas for about 3 to 4 cents per gallon more than he paid, he explained Monday.

"It's just a losing proposition," he said. "You don't make money selling gas. It's a capital-killer. I've been in this business long enough that I remember gas shortages in the ‘70s. I remember odd and even tag days."

Gray's Texaco is unique because the station doesn't change its pump prices daily to reflect fluctuations in the oil market, a standard practice among large distributors.

"We don't change prices until we order another tanker load," Gray said. "We may be the lowest and everyone will come here and buy it up, then we may order at a higher price and we'll be the highest. We can go from being a hero to a zero very quickly."

Gray said his station has a loyal customer base, which helps boost sales when his prices are a few cents higher than competing gas stations.

"I have great customers, which means if I'm the highest in town because I ordered it when it cost more, they'll still come and get gas here," he said.

Prices probably won't decline in the coming months, Gray said. Summer formula gas, which contains different additives than the gas in today's pumps, is a little more expensive to make, he explained.

Diesel fuel costs even more than unleaded gas - ranging from $3.89 to $3.99 a gallon in Havelock Monday. Gray said the diesel prices contribute to increased production costs for retail goods that have to be shipped by large trucks.

"They get upset when they come to the pump and buy gas, but it's all passed down when they get their groceries," he said. "Our country runs off fuel."

Gas distributors are squeezing their already minimal profit margins to stay competitive, said Brian Fisher, president of Fisher Oil Co., which operates Fuel Market stores.

Sales in the U.S. convenience store industry are up 12 percent, but profits are down 23 percent, Fisher said.

"The perception I think that many people have is that the retailer is the person setting the price, and the truth is we have very little control over the retail price," he said. "We have to sell it for more than we paid for it."

The cost of gas for large distributors changes daily, Fisher said. Prices increase to maintain a retailer's modest margin, which can be as little as a half-cent per gallon, he said.

"We put our price sign out on the street to advertise how competitive we are," he said in a news release. "If we could lower prices and remain profitable, we would."

Diane Tyndall, chairwoman of business programs and an economics instructor at Craven Community College, agrees that gas stations don't deserve the blame they often receive for high prices.

"I think there's a misconception that people in eastern North Carolina are price-gouging us, and I don't see that going on at all," she said. "I think it's more about demand."

Tyndall explained the price increase as a supply-and-demand relationship. American and worldwide consumption of gasoline and oil products continues to climb even as prices soar, she said.

The world's oil demand averages 87 million barrels per day, she said. The United States uses about 21 million barrels.

"Demand is outstripping supply, which is driving the price up," Tyndall said. "What's happened is demand has pretty much continued unabated."

Regular unleaded gas could cost more than $4 per gallon if the world's appetite for oil proves insatiable, she said.

"I don't really know that we can stop this train because it's not a North Carolina train and it's not even a United States train," she said. "It's an international train."

Tyndall said people can change their driving habits to reduce oil consumption. Trading large trucks and sport-utility vehicles for compact and hybrid cars, carpooling and consolidating car trips to reduce wasted gas will all result in less pain at the pump.

"We all as drivers have to figure out ways to be smarter about our consumption," she said, "or this could just spiral out of control."