Gas prices squeeze consumers, stores

ST. LOUIS -- With gasoline and diesel fuel prices reaching record highs this week in Missouri, motorists and truckers aren't the only ones feeling pain at the pump.

"The people that hate high prices the most are the people that sell the gas," said Ron Leone, executive director of the Missouri Petroleum Marketers & Convenience Store Association.

"There's nothing but bad news all around for them."

Their profit margins are squeezed by reduced sales of fuel and in-store purchases, gas thefts and increased credit card sales, Leone said.

Across Missouri and the rest of the nation, the price per gallon of unleaded gasoline and diesel broke records this week.

Columbia, Kansas City, Springfield and St. Joseph recorded their highest-ever price per gallon of $3.40, $3.34, $3.30 and $3.34 on Wednesday; St. Louis reached the top Monday with $3.48, according to AAA and the Oil Price Information Service.

The Missouri Department of Natural Resources said Wednesday gasoline is selling for an average of more than 40 cents per gallon more than a month ago, and 67 cents more than at the same time last year.

The average retail price for Missouri diesel fuel increased 51 cents in the last month to $4.05 per gallon. The average is nearly $1.21 higher than for the same period in April 2007.

Gas prices reached a record high national average of more than $3.53 a gallon Wednesday, and are well above the year-ago average of $2.86 a gallon. Diesel prices also set a record of more than $4.21 a gallon.

How high will prices go?

"That's the $64,000 question," said Mike Right, vice president of public affairs for AAA Missouri.

The U.S. Department of Energy has said prices could rise to $3.60 a gallon during May and June. But that was based on crude oil cost projections of $100 a barrel.

"Yesterday, it closed at $119.38 a barrel," Right said.

He said a variety of international events are affecting the market -- from pirates firing on a Japanese oil tanker Monday off the eastern coast of Yemen, to a looming strike by oil refinery workers in northern Europe to civil unrest causing pipelines shutdowns in Nigeria.

Reducing consumption

As bad as things are, Missouri enjoys relatively low gas prices because of a favorable tax structure, competition and proximity to distribution systems. The Missouri average is 13 cents lower than the U.S. average of nearly $3.51 per gallon.

Right said there's been a "flattening of travel, if not a slight decrease" as motorists take steps to reduce energy consumption.

"They're taking fewer leisure trips, driving shorter distances, looking to economize," he said.

"This is a family budget expense they hadn't planned for."

Leone, whose industry group represents fuel retailers and convenience store owners, said higher prices are hurting retailers four ways.

Higher prices force motorists to pay for gas with credit cards, which costs retailers 5 to 7 cents per gallon.

Because motorists are spending more at the pump, they've cut back on coffee, soda and snack purchases in the store.

Stations are seeing more gas thefts, which also cut into profits.

Finally, demand for fuel is decreasing as much as 10 percent.

These factors, Leone said, "are not a good recipe for success."

He hasn't seen stores close yet, but said it may be too early.

"We're adjusting as best as we can," he said. "These are unchartered waters -- the historic high cost of crude, the high cost of refining, speculation in the futures market, and the historic low of the dollar.

"All of these things are creating a terrible perfect storm."

The state said its Energy Center's "Saving Green on Gasoline" brochure and Web page offer ways to save on fuel costs. They feature fuel economy tips and Internet links to resources on carpooling, mass transit, vehicle maintenance, driving techniques, trip planning and choosing energy-efficient cars.