It’s safe to assume that there will be a downward adjustment in demand after the summer driving and vacation season, which should also provide some relief. Continued from page 13 o Most of the fuel we use here in the state and especially along the Wasatch Front is produced from our local refineries. • We have two product pipelines that carry refined petroleum product out of Utah: o The Marathon line supplies markets in the Northwest (Idaho, eastern Washington, Oregon) o The UNEV line delivers product to Cedar City and on to Las Vegas. • Prices in Nevada, Washington and Oregon, where we supply finished product to, impact prices here in SLC. On a given day in late July, for example, the average sales prices in our export markets were impacting prices in Salt Lake: o Average gas price Nevada: $5.558 o Average gas price Washington: $5.474 o Average gas price Oregon: $5.487 o Average gas price in SLC: $5.07 o Updated prices can be found here: https://gasprices.aaa.com/state-gas-price-averages/ • Prices are typically cheaper in the eastern half of our country where there are more pipelines and options for barge cargos – whether that be domestic or imported product. • There have also been accusations that oil and gas execs are keeping prices at the pump high on purpose to boost the value of their significant ownership interests in those companies. So then, who owns America’s natural gas and oil companies? o Millions of Americans – through retirement funds like 401(k)s and private and public pension funds (typically accessible by groups including teachers and firefighters) and other investments. o The percentage owned by individuals – corporate officers and retail owners – is just 2.4%, opposite of the repeated claim that large amounts of natural gas and oil industry stock are owned by oil and gas corporate officers. • Similarly, who owns gas stations? o Refiners own less than 5% of the 145,000 retail stations across the country. o When a station bears a particular refiner’s brand, it does not mean that the refiner owns or operates the station. The vast majority of branded stations are owned and operated by independent retailers licensed to represent that brand. o According to the National Association of Convenience Stores (NACS), more than 60% of the retail stations in the U.S. are owned by an individual or family who owns a single store where gasoline is already a loss leader to get people in the door to buy higher margin items. • Wrapping this all together, the supply chain and ownership chain to get crude oil out of the ground and into your gas tank is long – with many independently owned stops along the way – all responding to the power of the free market. Reading the Tea Leaves • At the end of July we started to see some price drops. Analysts believe much of that is in response to speculation about the looming recession more than any fundamental change in supply and demand. • It’s safe to assume that there will be a downward adjustment in demand after the summer driving and vacation season, which should also provide some relief. • The industry is also working diligently to increase supply and hopefully we’ll see some relief there in the coming months as well. 14 UPDATE
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