When gasoline prices were lower in Topeka than Lawrence this spring, drivers started taking notice. Several weeks later, when gasoline prices along Interstate 70 and in small towns like Perry and Linwood dropped well below what Lawrence gasoline station were charging, people became angry.
“It is crazy,” said John Benson, who watched as prices in nearby cities fell while Lawrence’s barely budged. “What is frustrating a lot of people in Lawrence and a lot of people who come to work in Lawrence is: Why is Lawrence’s gasoline so high?”
Benson’s question is one that many have asked across town.
In May, for example, the price of gasoline was 16 cents higher per gallon in Lawrence than Topeka. Since then, the price has come down, but the gap between Lawrence and Topeka remained.
According to AAA’s Fuel Price Finder, the average price of gasoline in Lawrence was $3.39 a gallon on Friday afternoon. That was 5 cents higher than Topeka and 2 cents higher than Perry.
The disparity was greater a week ago, when gasoline prices in Topeka and in smaller towns such as Tonganoxie were at least 20 cents lower.
“I could drive to Perry, which is less than 10 miles away, and get it a lot cheaper,” Benson said.
Part of the answer has more to do with the market in Topeka than Lawrence.
Gary Haag, vice president of Haag Oil Company, owns two gas stations in Lawrence and about a dozen in Topeka.
“Well, Topeka is going through a shakedown over here,” Haag said.
Kwik Shop has opened two new stores in Topeka, several grocery stores have opened filling stations and there have been a couple of other gas stations that were closed and then reopened.
“There’s at least seven brand new large-format stores that have opened in Topeka and are pricing aggressively,” Haag said.
As a result, gas stations in Topeka are pricing gasoline at or below cost.
Increased competition seems to be a reasonable explanation for Jim Hanni, executive vice president of AAA Kansas. Hanni, who commutes between Lawrence and Topeka, has kept an eye on the price difference.
“There hasn’t been a lot of new convenience stores put into the Lawrence market lately, so it’s not quite as hypercompetitive as a market as it may be over (in Topeka),” he said.
While competition would explain the difference between the Lawrence and Topeka gas stations, it doesn’t justify why Lawrence has higher prices than the smaller towns around it.
Haag said that might have to do with the fact that Lawrence gets most of its gasoline from the Kansas City refineries, which are required to have gasoline that carries summer blends that result in fewer emissions. And while Lawrence isn’t required to use those summer blends, its gasoline supply could still be affected by it.
On top of that, Haag said, the price gas stations have to pay for gasoline has been on a roller coaster this summer.
“We have had five days in the last two months when it went up or down more than it did on Hurricane Katrina (when prices went up 17 cents),” Haag said.
If an owner of a smaller gas station buys gasoline at a time when prices are at their peak, they can be stuck at that price for days. Larger gasoline stations have an easier time absorbing the shifts in the market.
Some, including Benson, don’t buy those explanations. He and others have used words such as price fixing, gouging and monopoly to describe how they think gasoline prices are being set in Lawrence.
Such accusations are hard to prove in court, said Jeff Wagaman, deputy chief of staff for the Kansas Attorney General’s office.
Under Kansas law, price gouging is when the price charged grossly exceeds the prices charged for similar products available to similar consumers.
Price gouging would be clear if gas stations were charging $3.50 a gallon in one part of city, but $7 in other areas. At lower amounts, say 20 cents, price gouging might be difficult to prove in a court of law, Wagaman said.
Price fixing is when there is an agreement between two or more people that affects the price paid by consumers. That also is hard to prove in court.
Wagaman named other reasons why gasoline prices could be higher in Lawrence. For example, gas stations have to take into account labor costs, property values and taxes when setting prices. Then there is the heavy demand on gasoline created by summer holiday and weekend traffic.
“Higher demand usually translates into higher gasoline prices,” Wagaman said.
Tom Palace, executive director for the Petroleum Marketers and Convenience Store Association of Kansas, said that gas station owners have every right to charge as little or as much as they want.
“We are the only industry to post our prices daily,” he said. “I’d like to know if (consumers) didn’t see the price sign up there, what would they think.”
So far no complaints about Lawrence’s high gasoline prices have found their way to the attorney general’s office. But, Wagaman said, consumers are free to make them.
“Prices have risen dramatically and we absolutely understand their frustrations,” he said. “If consumers feel like they are being gouged, file a complaint.”
Those complaints can be filed by calling 1-800-432-2310 or by going online to the attorney general’s website at www.ksag.org.
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