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Columbus gas distributor: ‘I’m barely surviving’

 

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Kristin Mamrack

 

Mississippi''s gas prices are among the lowest in the nation, but Columbus'' gas prices consistently remain among the highest in the state and local oil company executives seem reluctant to explain why. 

 


"I don''t know that they''re higher in the area," Fred Newman Jr., president of Newman Oil Company, angrily said Tuesday, when asked what factors determine pricing at the BP distributor''s stations. "How can I pay my bills if I don''t make money? Do you want to explain that to me? 

 


"Don''t the Imes own the paper?" he continued, referring to Dispatch Publisher and General Manager Birney Imes. "Let me just sell you this place and then you can worry about it. I''m angry because I work my ass off and I have to pay my bills." 

 


Despite repeated attempts, neither Lee Sanders of Sanders Oil Company, which distributes Chevron and Citgo gasoline, nor Joe Gillis of Dutch Oil Company could be reached for comment for this story. 

 


Industry experts say high prices of gasoline are the result of several factors, including customers'' willingness to pay them, the cost to produce and deliver gasoline, including the cost of crude oil to refiners, refinery-producing costs, marketing and distribution costs and the retail station costs and taxes. 

 


According to the Mississippi Petroleum Marketers and Convenience Stores Association, the prices paid by consumers also reflect profits or losses of retailers, marketers, distributors and retail station owners.  

 


And federal, state and local taxes are large components of the retail price of gasoline. 

 


Additionally, competition controls prices, said MPMCSA Executive Director Jerry Wilkerson.  

 


"A lot of the time, (prices) are due to competition," agreed Patrick DeHaan, senior petroleum analyst of GasBuddy, a Web site that tracks daily fuel prices all over the country. "The number of stations results in better competition. And areas with wholesale clubs tend to be lower in price, simply because the wholesale clubs pull everybody lower." 

 


"People want to say, ''Why does gas go up?''" Newman said. "Every day the price goes up. Crude oil is up 70 cents a barrel. I can''t entirely explain it, because I''m not an expert. Gasoline is a day commodity and it''s traded globally every day. Money flows in and out of that hedge fund to buy it. As far as surrounding areas, we''ve got some areas that have Wal-Marts. There are other areas in this state that are suffering. 

 


"I don''t know you can tie it to any one reason," he added. "But you price it to whatever you can price it in the marketplace, which is usually not enough. I''m barely surviving now, worried about how I can pay for it. I''ll let you talk to my accountant, if you think I''m making too much money. Try buying 8,800 gallons a day and then paying the (associated) taxes on it."

 

 

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Reader Comments

Article Comment Slate commented at 7/2/2009 12:33:00 PM:

What an ass...typical of the Newman, Sanders and Gillis clans.

 

Article Comment barkingspider commented at 7/2/2009 12:35:00 PM:

Cry me a river! When oil prices go up a few cents a barrel we see an automatic increase in gas prices, usually that same day. When oil prices decline the price at the pump stays where it is for several days before moving downward, if it moves at all. I refuse to believe that one of the distributors would actually come out and say that he "doesn't know" why prices are higher in this area. Give me a break!

I do compliment the CD for starting to dig into this matter, however. Keep it up!

 

Article Comment dbossdawg commented at 7/2/2009 12:46:00 PM:

They also think that they are pulling a fast one by offering gas with "up to 10% ethanol", for the same price as other distributors offer real 100% gas. The cost of ethanol induced gasoline should in fact reflect the 12% loss in fuel mileage.

 

Article Comment Chris Ellis commented at 7/2/2009 12:47:00 PM:

Barely surviving? Good so are we! It is ridiculous that gas in starkville is 20 cents cheaper per gallon on a daily basis. 70 cents a barrel will translate to 70 cents at the pump...that's what is just crazy!

 

Article Comment Bossman commented at 7/2/2009 1:13:00 PM:

This guy has got to be kidding. If he would reduce his prices by just $.05 per gallon less than the other 2 distributors for 1 week, he would have more business than he could keep up with. It doesn't take a rocket scientist or even a good business manager to figure out that being lower than your competition is very good for your bottom line.

 

Article Comment Very concerned commented at 7/2/2009 2:28:00 PM:

Barely surviving my foot... how come gas is so much cheaper 30 miles away in Starkville. Its usually at least 20 cents a gallon cheaper here. If they would sell their hummers, and suv's, and million dollar homes and stop being so greedy, then maybe we can all survive and not just the gas distributors!! I personally have a friend who works for a gas distributor and he just bought a million dollar home and goes on expensive vacations about 4 times a year, so don't tell me anything about "trying to survive"!!!!!!! That is BS and we all know it!!

 

Article Comment Boo Hoo commented at 7/2/2009 2:42:00 PM:

What an arrogant man.
They are all arrogant.

 

Article Comment Ominous question commented at 7/2/2009 2:58:00 PM:

Kristin, what did the accountant say?

 

Article Comment MARK commented at 7/2/2009 3:29:00 PM:

IT DOES SEEM STRANGE THAT STARKVILLE GAS IS ALWAYS CHEAPER WHEN THE SAME 3 DISTRIBUTORS OWN STORES AND DELIVER IN BOTH PLACES. FRED DOESN'T WHINE WHEN HE HEARS OF CRUDE GOING UP AND HE IMMEDIATLY JACKS UP THE PRICE OF THE GAS ALREADY IN THE GROUND. THEY WON'T DROP PRICES UNTIL THEY HAVE HAD A COUPLE OF WEEKS MAKING PROFITS ON THE LOWER COSTING GAS.

 

Article Comment ba@ba.com commented at 7/2/2009 3:36:00 PM:

How many of you run a business? Why are you complaining about someone's prices? Shouldn't you just not use them? Isn't it their right as a business owner to determine what prices they want to charge? After the risks taken to put together their oil company, the least and perhaps the only thing they deserve is to be able to set whatever prices they deem best for their business and their business plan. Maybe we should be glad they charge more because they are the last ones who will put water in the gas. I am sure they could charge more if they wanted to. Nevertheless, this is a good example of another downside to running a business that you never think about until it happens: having to listen to people whine about things they for some reason seem to think they are entitled to

 

Article Comment A reader commented at 7/2/2009 4:14:00 PM:

How is it that gasoline is tied to the price of crude oil so much that it fluctuates from hour to hour yet the cost of other products (chicken, beef, pork, corn, etc) at the grocery doesn't fluctuate anywhere near that much? The dealers buy the gas in bulk (8800 gallons a day, according to Newman). Their price is fixed. Take that fixed price, mark it up and resell it for a set amount. Isn't that how every other business works?

exGASperated, he may not OWE anyone an explanation for his pricing, but his customers are asking for it. Consumers have the right to do that (and to take their business elsewhere if they don't like the answer). Obviously, the public shouldn't be privy to his, the Dispatch's, or any other private company's books.

 

Article Comment A Smart Consumer commented at 7/2/2009 9:02:00 PM:

Thank you Mr. Newman for having the courage and trying to make your case. The reason I am not one of your customers is that I patronize an independent On Hwy 45 that consistently sells 3¢ to 5¢ a gallon cheaper than any franchised dealer. This same place only sells 100% gas rather than an ethanol blend. If one place can be profitable by selling gas for less, others can too.

As for Mr. Sanders and Mr. Gillis - your lack of cooperation with explaining to the public the challenges that you face makes me glad I don't buy anything from you either. That is especially true for Mr. Sanders who's stations are always the highest in Columbus. Some friendly city!

 

Article Comment BullSheez commented at 7/2/2009 10:08:00 PM:

someone call Willowbrook. Fred in going 10-90 on us.

 

Article Comment Justin commented at 7/3/2009 12:18:00 AM:

As long as people keep paying the higher prices in Columbus, they deserve to have to pay the high prices. If it really matters to the people of Columbus, they will start buying gas at the cheapest station in town or leaving to another city to buy their gas. There is not a law saying that the people of Columbus can only buy here. It is just a matter of what the people of Columbus are willing to do to battle the distributors in town. If no one in town bought from these distributors, they would have to lower their prices.

 

Article Comment From Columbus now living in California commented at 7/3/2009 1:15:00 AM:

I was born and raised in Columbus but joined the military and now reside in California. All I can say is try paying an average of $2.93 for gas out here, then complain about high prices.
Oh yea, GO BULLDOGS!!!

 

Article Comment Dispatch Support commented at 7/3/2009 10:22:00 AM:

In addition to daily prices in the paper, you can track (and report) local gas prices at:
http://www.cdispatch.com/mashups/gasprices.asp

 

Article Comment JC commented at 7/3/2009 12:06:00 PM:

For a gas distributor, Mr. Newman seems to not know much about how the business of gas distribution works, or about his own markets.

"I don't know that [gas prices are] higher in the area"? Wow.

 

Article Comment Kilgore Trout. commented at 7/3/2009 11:31:00 PM:

Why does goas go up? "I can't entirely explain it."

You're a gas distributor and you can't explain how and why gas prices fluctuate? I gotta call "Bulls___" on that one.

One word: Collusion. The big three want to maintain the status quo, so they don't compete by undercutting the other one on the price. Columbus is a big market. The Big Three want to keep the pie evenly divided. It's the same way the Mafia works, Big Oil companies in the US work, and the same way the OPEC cartel works on a global scale.

If he were "barely getting by," and the gas distribution business in Columbus were truly competetive, then the other companies would smell blood in the water and undercut him.

 

Article Comment Chandra commented at 7/4/2009 8:37:00 AM:

Barely surviving my foot. If that's the case, get out of the business altogether! And to be so ignorant and arrogant about it says a whole lot... Everything in Columbus is higher than sorounding area and indeed even in other parts of the U.S. Someone need to investigate a lot of things in Columbus as far as I'm concerned. Including how business is conducted period. Somebody is making a whole lot of money in Columbus, but yet some of the neighborhoods have gone negelected for many "moons" and from what I understand, the powers-to-be has no intention of correcting such egregious acts. I don't care what comes out of their mouthes, the proof of old neighborhood that hasn't been updated with just the simplest accomidations has been overlooked for decades. Please! The people who live and has lived in those communities, they're the ones that's just barely surviving. Wake up residents of Columbus! Buy your gas,food, clothes and anything else, where it's cheaper! Don't do business with people who don't recognize you as a viable consumer, your community, and dollar wise, your economic contributions,and last but not least your voting power. Barley surviving, Right!!!!!

 

Article Comment exGASperated commented at 7/4/2009 9:08:00 AM:



"Smell the blood"

I am sure WalMart execs are shivering in their boots wondering what the "cartel" is going to do with their gas prices.

 

Article Comment barkingspider commented at 7/4/2009 11:06:00 AM:

Walmart is Murphy Oil, and you knew that sir, and they are in the business to make money, too. They will undercut you by a few cents to get business but they see what prices are in the area and want to get their fair share also. Walmart gas in T-town is always 5-10 cents per gallon cheaper than in Columbus. They are not in the "cartel", but you know they keep up with what you are doing and react just like every other distributor in this area that's not a member of your breakfast crew. They know how to play the game, too.

 

Article Comment Q commented at 7/4/2009 5:39:00 PM:

ExGASperated, your comparison between the newspaper and the gas stations is totally illogical. No one HAS to buy the CD, you can get all the news you want online. People HAVE to buy gasoline, and few can afford the time or the money to drive to other towns to buy it. I can.

It appears to me, due to your incessant defense of our local gasoline moguls, that you are (1)one of them (2) are related to one of them or (3) work for one of them. You obviously have a vested interest in Columbus gasoline prices remaining the highest in the state. Unless these three show us HOW their overhead is so much higher than other distributors in the state, then they won't get any sympathy from anyone here.

 

Article Comment pissed commented at 7/4/2009 7:54:00 PM:

exGASperated... you sound like your in the business of screwing people. If living a hard life consist of living in a mansion, eating nice marbled thick cut ribeye steaks, accompanied my a nice sniffer of brandy afterwards s*&t I don't know where i need to look in the dictionary for my broke status.

 

Article Comment Kaye Mims commented at 7/6/2009 1:46:00 AM:

I'm new to this area, obviously many of you haven't noticed the hard times have hit everyone, including your Big Three. Take a drive from here to La.,AK.Tx. and you might be happy your Big Three can still offer you a Gas Station. What would you do if you were in the Hot seat? Most of you know nothing about operating a business with employees,taxes,etc, and I personally have met Joe Gillis and he is not arrogant.He works hard just like the rest of us!

 

Article Comment Leeroy Jenkins commented at 7/6/2009 10:32:00 AM:

This is precisely why I do not buy gas in Columbus anymore. I buy it in Starkville where it is always cheaper.

Murphy's is the worst gas you can get, followed by Sanders Oil. I wouldn't know about Newman because all of those locations look like they would have gas in the water.

 

Article Comment exGASperated commented at 7/6/2009 11:06:00 AM:

Q - I feel sure they don't want or need your sympathy or anyone else's.

pissed - The size of one's house and the kinds of food one eats is not an indicator of wealth.

Kaye - Good post except the "Most of you....."
You have no way of knowing what any of us know.

 

Article Comment J Griffith commented at 7/6/2009 11:56:00 AM:

Maybe Mr. Newman should sell his fancy season tickets for MSU or possibly downsize his house and property like everyone else has had to do - then we can talk about barely surviving.

 

Article Comment Alan commented at 7/6/2009 12:41:00 PM:

I dont beleive for one minute that the gas distribution businees is suffereing here. What a joke, your hurting, oh boo hoo, get a life!! I just traveld to Tx this weekend and went through Louisiana as well Kaye. And quess what...Gas was way cheaper in all those places compared to here. While in Texas I found 87 octane to be $2.31 and in LA to be $2.35. Gas here is stupidly high because this town is filled with old money. If you are hurting and barely survivng Mr. Newman than maybe you should learn about your business and how to run one and also downsize your life!! Then you will feel the crunch of todays economy! Until then stop your whinning because nobody gives a rat about how you think you are hurting! And to the rest of the Columbus Cartel, step up and expalain why your gas is higher than the rest of the south. Maybe you can even educate Mr. Newman on his business.

 

Article Comment Q commented at 7/6/2009 5:40:00 PM:

Kaye, you're *obviously* new to this area. This situation has been going on for a long, long time. Our "Big Three" are in fact our "Only Three" because they control distribution, and thus prices, of gasoline here. For years and years Columbus has had the highest prices in the state, and we want answers as to why. BTW, I have driven to LA, AR, TX, and all I see is lower gas prices. So, what's your point?

 

Article Comment sherlockms commented at 7/7/2009 7:19:00 AM:

the problem is easy to solve nobody buy gas in columbus

 

Article Comment danny delk commented at 7/14/2009 11:45:00 PM:

I know Mr. Newman and from my opinion, and I can see everybody has a different one, he is an upstanding type up of individual. I have owned my own business before and it is very difficult to run a profitable business with all of the overhead, taxes, and not knowing what he is going to have to pay for his next truckload of gas. If you don't like his prices, don,t buy from him and quit your bit--n!!!! What you really should be concerned with is why were not drilling here and drilling now!
Geologists have confirmed that the U.S. has enough crude oil reserves to last for at least a century.
The only blame is to the voters , that would be you complainers, voting for these left wing democrats that don't give a rat's behind about you. All they care about is staying in power and taking care of special interest groups.
Ex: What specifically has OBAMA done to better your life or better yet help this nation. Just one specific thing. Blank!


 

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