The big squeeze
Gasoline prices throughout the country have spiked in recent weeks. Some people buying gas in Woodstock have noticed prices exceeding those of neighboring communities.
On Sept. 11, the average gas prices in Woodstock exceeded all other McHenry County municipalities with an average price of $4.36. In comparison, most Crystal Lake and McHenry stations were selling gas for an average of $4.10, Harvard averaged $4.19 and Huntley stations were selling for and average of $4.18. In recent days, the cost difference per gallon has diminished, but as of Monday morning, Woodstock gas stations remained about 10 cents per gallon higher on average than neighboring municipalities.
Because Woodstock is not a home rule community, city leaders are unable to pass a gas tax beyond the county, state and federal taxes already collected, meaning Woodstock prices shouldn’t be impacted by additional taxes.
“We have contacted our local gas station owners,” said Mayor Brian Sager. “It is a major concern.”
While the city has no legal authority to challenge local businesses on the prices they set, Sager said it is “absurd” that prices have been as much as 50 cents higher than in places such as Rockford. He said noticeable discrepancies between Woodstock and neighboring municipalities also is cause for alarm.
“It’s not like gas is cheaper [for the station owners] in the city of Crystal Lake,” Sager said.
Sager said the city has received numerous complaints from residents, prompting him to draft a response to send when questions about gas prices are brought forward to the city. In the letter, he noted reasons for higher gas prices in Chicago and the suburbs.
“Gas in the Chicago and suburban areas, where there is more traffic and more potential for pollution, is taxed at a higher rate to discourage pollution and generate additional tax dollars for environmental programs than gas in rural and southern parts of the state,” Sager stated in the response. “The federal government has any number of options to reduce gas prices, and I am confident you have heard of many such opportunities as discussed in the media. Federal reluctance is couched in a variety of arguments, but mostly center around energy independence and national security concerns. The bottom line at this level is that we can and should express our concerns to both our state and federal representatives and ask for relief.”
Even with that explanation as to why gas is more expensive near Chicago, questions remained as to why Woodstock has been higher.
“That doesn’t address why gas prices are so different between Woodstock and other neighboring communities such as McHenry, Crystal Lake or Algonquin. The explanation from station owners is that the demand for gas is higher in municipalities with significantly higher populations and, therefore, gas “turns over” faster in those communities making it more responsive to current market prices. If the local gas station was forced to fill their supply tanks on a day when the wholesale price was high, they must continue to sell that gas on a retail basis at the higher price until they can refill their tanks at a lower price, even if the wholesale price of gasoline drops,” Sager said in the letter. “Unfortunately, you would think the converse would also be true. If they bought at a lower price, they should be able to hold the price low until their tanks are emptied. That doesn’t seem to be happening. So the question becomes one of price gouging which, of course, is illegal.”
Mike Consolo, owner of the Woodstock Marathon, 1199 S. Eastwood Drive, said gas prices are dictated by the market.
“We’re competitive. We have to keep up with the guy down the street,” he said. “We try to be as fair as possible.”
Jim Olson, who had owned gas stations in Woodstock and Harvard as recently as two years ago, said gas station owners sell at minimal profit margins.
“Even though some gas station prices are lower, they may not be making any money,” he said of the disparity. “Nobody makes any money when the prices go up. If you’re lucky, you can make a 10 cent margin. If you sell a $4 product you make a 10 cent margin. Years ago the profit was between 15 and 17 cents, now it is 10 cents at the most.”
Olson said some gas station owners are put in situations where they must lowball gas prices to attract people to the convenience stores attached to the stations.
“The only way [gas stations] make money now is by selling coffee, pop and candy … if they are lucky enough they can make enough money to pay the payroll,” he said. “Sometimes when gas prices go up in one neighborhood, they don’t [go up in others]. Some people won’t raise prices right away because in two weeks there will, eventually, be more of a balance.”
The Office of the Illinois Attorney General monitors gas pricing in the state and recently put Illinois gas station owners on alert late August that they would be monitoring prices.
Under state law, the office can investigate gas prices if a natural disaster occurs, such as a hurricane, which disrupts gasoline supply and price gouging occurs related to that supply disruption.
Investigators with Attorney General Lisa Madigan’s office have monitored retail price increases since Hurricane Isaac to determine if they are justified by a spike in wholesale prices or are the result of illegal gas gouging.
Maura Possley, deputy press secretary with the Illinois Attorney General, said the office has received more complaints about increasing gas prices in recent weeks, some of which claim possible gas gouging. She said just because prices spike doesn’t mean gas gouging is occurring. She said highly fluctuating prices could give the appearance of gas gouging even if none is occurring.
Possley said the complaints are investigated to determine if the accusation is justified. She said no specific complaints have come from the Woodstock area, however.
“Every situation is unique,” Possley said. “We urge people to reach out if you do think [gas gouging is occurring].”
People who think gas gouging is occurring are urged to call the office at 800-386-5438. People also can go on www.illinois.gov/gasprices to register a complaint.