HomeMy WebLinkAbout1999-04-27 - AGENDA REPORTS - SCV GASOLINE PRICES (2)AGENDA REPORT
City Manager Approv
Item to be presented by: € Steve Stark
NEW BUSINESS
DATE: April 27, 1999
SUBJECT: SANTA CLARITA VALLEY GASOLINE PRICES
DEPARTMENT: Administrative Services
City Council receive report and provide staff with direction.
BACKGROUND
It is well known that the Santa Clarita Valley has been subject to high gasoline prices. By
simply driving over the hill to the San Fernando Valley, you can see that prices in the
Santa Clarita Valley are higher. Recently, the Automobile Club of Southern California
(AAA) issued what is called the Fuel Gauge Report (FGR). This report, for the months of
January and February 1999, validated that the Santa Clarita Valley fuel prices are higher,
on average seven cents or more, than the Auto Club's Southern California average. When
compared to the San Fernando and Antelope Valley, Santa Clarita fuel prices were five or
more cents higher.
The information for the FGR was gathered by Oil Price Informative Service (OPIS) for the
Auto Club. Staff contacted OPIS to confirm the research methods and findings; however,
OPIS informed staff that the requested information was confidential and not available for
disclosure.
The release of the FGR was followed by several local reports, including newspaper articles
from the Daily News (Santa Clarita ed., 1/23/99); the Signal (1/20 and 1/28, 1999); and the
Santa Clarita Valley Business Journal (2/99). These articles stated that gasoline prices in
the Santa Clarita Valley are the highest in the nation.
Some Santa Clarita dealers have stated that gasoline prices are higher in the City because
of higher wholesale prices charged by the oil companies. According to gasoline dealers, they
are compelled to charge higher prices at the pump because they purchase fuel at a higher
price.
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SANTA CLARITA VALLEY GASOLINE PRICES
April 27, 1999 — Page 2
Also, some of these same gasoline dealers have questioned AAA's figures. They have stated
that gasoline prices are higher in the Santa Clarita Valley, but not the highest in the
nation. An independent survey conducted by a local gasoline dealer showed on average fuel
prices were lower by two to three cents, compared to that of the FGR. Although fuel prices
are lower than the numbers reported by the Auto Club, the survey still showed SCV fuel
prices among the highest, when compared to the Auto Club's Southern California averages
for the three grades of gasoline.
As a result of these findings and the public statements made by SCV gasoline dealers, staff
contacted the major oil companies and expressed great concern about the recent
information on fuel prices. Staff invited the oil companies to take the opportunity to
respond and provide information about the issue at hand. Of the eight letters sent out,
staff only received four responses, which include ARCO, Mobil, Tosco (a marketing company
representing several stations including Union 76), and Exxon.
According to the oil companies, size, geographical diversity, and competitive conditions of
the various areas determine prices. The competitive pricing situation can vary from area to
area. They also stated that wholesale prices are very similar from area to area and that
retail prices can only be explained by local dealers.
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