Inching down - Coeur d'Alene Press: Local News

Inching down

Tight inventories blamed for Idaho's slow reaction to falling gas prices

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Posted: Friday, July 27, 2012 12:00 am

When it comes to decreasing gas prices, North Idaho has sputtered compared to even small towns in the region.

"(The situation) doesn't make sense all the time," said Dave Carlson, AAA Idaho spokesman. "AAA has speculated that tight inventories and limited production by refineries in the Rockies may have been behind the slow drawdown in retail prices in Idaho."

"Generally, however, lower rack prices for gasoline mean there's more opportunity for hungry retailers to drop prices."

Local prices have been inching down in the past month goIng from an average of $3.66 in Coeur d'Alene to $3.51 on Thursday and from $3.67 in Post Falls to $3.57, according to AAA.

Spokane, generally about a quarter higher than across the border in Idaho, is only slightly higher at $3.60.

Post Falls' Jay Nelson, who filled up on Thursday, has taken notice that North Idaho's prices haven't dropped as sharp as some other areas.

"Makes me a bit jealous," he said. "I just hope they don't shoot up toward the end of summer. I have plenty of boating I'd still like to do."

Timing and local decisions can be a factor with some areas coming down slower than others, Carlson said.

"When two or more retailers in a community (lower prices), other retailers take notice and average prices come down more quickly," he said.

Six weeks ago, for instance, Boise and Pocatello retailers were within a penny or so of each other at about $3.74 a gallon. This week the average per gallon price in Pocatello was under $3.39 a gallon, while Boise's price was $3.52.

Carlson said such a circumstance could explain why even small towns in the region are lower than prices in Kootenai County.

"We sometimes note there's more complaints when prices are coming down than when they're going up," Carlson said. "That's because motorists are very much aware of price movements, especially when they're paying more than their neighbors down the street, across the border or a thousand miles away."

Carlson said it may also be that retailers in small towns in neighboring states are simply passing on lower prices because they're paying less for their gas.

"I do know that West Coast crude is substantially more expensive than the crude oil used to refine gasoline in the Rockies," he said.

On the other hand, Idaho's retail prices have also been slower to react to higher oil prices, so they don't rise as fast as some other areas when prices are on the upswing, Carlson said.

"We have speculated on occasion that Idaho's geographic isolation from other sources of petroleum products limits competition, keeping more pressure on pump prices," Carlson said. "Retailers generally want to make as much as they can for the fuel that's in their tanks, so unless somebody takes the first step in cutting prices, most retailers will maintain their prices as long as possible."

Just four weeks ago, there was a 30-cent spread between U.S. and Idaho average prices, and Idahoans were paying the sixth-highest prices in the country. Higher crude oil prices have pushed U.S. prices higher, compared to Idaho's slow-moving markets. On Thursday, Idaho was within 3 cents of the national average.

"Idaho gas prices are stable and dropping - albeit slowly- at a time when oil prices have been rising," Carlson said.

Bottom line, Carlson said, there are plenty of intricacies in pricing, with few hard and fast rules.

"We remind consumers that oil and gas prices are not unlike the relationship of what a drought can do to prices for wheat or corn," he said. "Limit the supplies and prices go up. Supply and demand are market essentials that do come into play. And petroleum prices take plenty of cues from market traders, inventories, production and demand."

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