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Gas Prices: Baker's Big Bargain
Gasoline prices have been rising recently and have reached a near-record-high national average: $3.48 a gallon for regular unleaded, according to the Fuel Gauge Report.
But not in Baker City.
Some local stations are offering regular unleaded for $3.20 a gallon or slightly less.
The main reason for this unusual situation — local fuel prices tend to exceed the national and state averages — seems to be the recent opening of one new station and new ownership for another.
Both businesses are trying to attract customers with low prices.
Maverik opened its service station and convenience store — the company's first in Oregon — last fall.
And USA Gasoline (Tesoro) bought the former Albertsons Express.
Both businesses are on Campbell Street.
Marie Dodds, director of government and public affairs for AAA-Oregon, said the two stations' aggressive pricing has turned Baker City in a localized "cheap gas haven."
"Some folks are really competing," Dodds said.
AAA tracks gas prices across the country.
Maverik was charging $3.18 a gallon and USA Gasoline was posting $3.20 early today.
Both prices significantly undercut the Oregon average, which is about $3.50.
Traffic-heavy Ontario had the state's lowest average at $3.12.
Portland, the largest city, was at $3.59 — above both the national and state averages, according to AAA-Oregon.
Baker City's average is $3.22.
Dodds compares fueling stations to grocery stores because there are so many types, and they have a multitude of marketing strategies.
"Every price strategy is a little different for each station," she said.
Sometimes a business will sell the gasoline or some other product at a loss to lure customers, and then hope to still make a profit on other items.
Those businesses that can't compete price wise try to provide good service, offer other products or uncommon amenities. Volume sold and the location of a gas station also affect pricing, Dodds said.
Station values customer loyalty
Black's Distributing Inc. on Broadway Street is an independent gas station that tries to compete with the bigger franchise operations by providing the best possible service, co-owner Shannon Black said.
That includes offering their primarily long-term customer base such promotions as free popcorn, having an employee who tells customers "the joke of the day," and offering 30 days' credit by application.
"We know price is not the primary draw — especially to our longtime charge customers," Black said.
The Blacks have been operating the gas station (there is no attached mini-market) for about 20 years. The business itself has operated at the site since the early 1970s, Black said.
Gasoline itself "is a fairly unique commodity" because people really take notice when the price rises, even if the increases aren't substantial, Black explained.
Black said the regular unleaded price at his station today was $3.21.
Ernie Harker, executive director of marketing for Maverik Inc., said the company's size, and its private status, helps it offer competitive prices.
"We try to be a penny or so (for a gallon of gasoline) within our competition," Harker said.
Tesoro Corp., the corporation that purchased the old Albertsons Express and renamed it "USA Gasoline," is the largest seller-marketer of fuel in the western United States so it can also competitively price its fuel, said Mike Marcy, a corporation spokesman.
Both Maverik and USA are situated near Interstate 84 and cater to travelers as well as local residents.
Dodds didn't want to even try to predict how long Baker City's fuel prices might remain below state and national averages, because prices are market-based and speculation-based.
"People sometimes forget that crude oil is a commodity, that gas is made from a product," she said. "Many people have to fill-up with gas and the prices… It's not something they have a lot of control over."
Experts have been predicting that prices will return to painful levels soon enough: $4 a gallon by mid-spring, even more in metropolitan areas.