Home Business Hobbs gas prices fueling ire

Hobbs gas prices fueling ire

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Larry Wormington recently took his family on a vacation, driving into Texas, over into and across Oklahoma from west to east, up about 90 miles into Missouri, then heading into South Texas by way of Del Rio.

Wormington said he and his family passed too many gasoline stations to count in their 2,000-plus-mile plus journey, buying close to $100 of fuel. The following weekend, his family made a trip west, this time to Cloud-croft and Alamogordo.

When he settled in after his travels, the lower gasoline prices he saw were ingrained in his mind.

“In all of these travels, I was appalled that everywhere we went, their gasoline prices were approximately 40 cents to over 80 cents a gallon cheaper than our prices here in the Hobbs area,” Worming-ton said. “We produce the resources right in our own backyard, and we have three refineries within two hours of our fields that they process and ship it back to us. So, we the hardworking citizens of our oilfield area would like to know, what is the answer for our high prices?”

High prices

Wormington’s question is a common one in Hobbs, which has seen consistently higher fuel prices in recent years than Albuquerque, Roswell, El Paso and Lubbock, Texas.

According to the American Automobile Association, the national average for gasoline on Friday was $2.493 a gallon, with an average price in New Mexico of $2.447.

The average gasoline price in Chaves County Friday was $2.317, $2.548 in Eddy County, and $2.420 in Roosevelt County. Rio Arriba County, near the Colorado border, had the lowest average gas price in the state Friday of $2.177 a gallon, according to the AAA.

Lea County was again among the leading counties in the state, with an average price of $2.811. Catron County led the state with an average price Friday of $2.847, according to the AAA.

Regular-grade gasoline averaged $2.324 a gallon Friday in Albuquerque, $2.447 in Las Cruces, $2.572 in Farmington, and $2.370 in Santa Fe, according to the AAA.

Regular-grade gasoline was selling Friday in Hobbs between $2.69 and $2.79 a gallon, with premium-grade gasoline selling for $3.24 to $3.29 a gallon, according to GasBuddy.com. Meanwhile, premium-grade gas was selling for as low as $2.76 a gallon Friday in Santa Fe, according to GasBuddy.

The roughly 50-cent typical markup in Hobbs has become an open secret — flummoxing some, irritating others and raising questions.

“I feel we are being robbed when we are currently hearing of less than $2 a gallon prices being common, and for the 87 octane-better fuel,” said Wormington, a life-long resident of Hobbs. “The attorney general’s office in Santa Fe never answers the phone when you try to reach them. Our money/ household budgets are stretched too far as it is.”

AG complaints

David Carl, press secretary for New Mexico Attorney General Hector Balderas, said he was unaware of any gasoline price-related complaints or investigations.

“While New Mexico does not have an anti-price gouging statute, Attorney General Balderas is committed to fighting aggressively to root out industry bad actors who seek to harm New Mexican consumers,” Carl said. “Any consumer who feels they have been harmed by illegal or unfair business practices is encouraged to contact our office.”

Lea County Clerk Keith Manes said he’s called the AG’s office about the high gas prices in Hobbs. Manes said it’s not just an irony that gas prices are consistently higher in Lea County, which is not just the top oil-producing county in the state, but also in the entire Permian Basin.

Manes alleges collusion among local gasoline providers, and he’s calling for a “bean burrito boycott.”

“It’s a monopoly,” Manes said. “Allsup’s has their own distributor that brings it in. Stripes has their own distributor, and K.W. Fuels brings in for Valero. Why is it so much more? They’re just gouging us. Lubbock is around $1.99 a gallon, Roswell is $2.29. Albuquerque is cheaper.”

Manes has started a campaign on Facebook meant to take a bite back.

“There’s quite a few that chime in online,” he said. “I’m not going to buy anything from them.”

Manes is calling on local residents to forego non-gasoline purchases from local service stations.

“You can’t boycott the gas purchases, because we can’t go anywhere else,” Manes said. “But you can boycott their bean burritos at Allsup’s, or all their groceries or whatever they sell in Allsup’s or Stripes, you can boycott that and force them to bring the gas prices in line with the rest of the country.”

Manes said gas was selling 70 cents a gallon cheaper in Mountainair last weekend.

“So how can they take it out in the middle of nowhere and it’s 70 cents a gallon cheaper?” he asked.

Manes is convinced the high cost of gasoline in Hobbs is not a distribution problem.

“It’s just a price-gouging problem,” he said. “So I’m really encouraging people to boycott those places. Don’t buy a bean burrito or anything. We have to buy gasoline, so we’re going to have to buy it from them. But don’t buy anything else from them, no bean burrito, no nothing.”

Manes said he, too, has contacted the AG’s office about local gas prices.

“They just kind of blow me off, tell me they’ll put it in a file,” he said. “That just irritates me that they just gouge us and gouge us. The joke is we pay for freshness because it’s made right here. People in the oilfield, most of them have a company vehicle, so it doesn’t hurt them. I have to pay for my own gas, the school teachers pay for their own gas, you pay for your own gas, so why are we having to pay 90 cents a gallon more than anybody around us?”

Logistics and markets

Hobbs Mayor Sam Cobb, speaking from a personal perspective and not necessarily as a city leader, said he believes the high local prices are a result of logistics and the marketplace. He said there are only a handful of gasoline providers in Hobbs and he’s unaware of a gasoline pipeline anywhere in Lea County.

“My personal opinion is we do not have good logistics into the area, we don’t have any pipelines or anything like that, so everybody has to haul gasoline from the refinery, which adds substantially to the costs,” Cobb said. “I think if we had more competition in the marketplace as compared to some other communities, the gas prices might be a little more competitive. But I think part of it is the logistics issue, that retailers cannot overcome without having a pipeline closer to their distribution points.

“A refinery might be a worthy project for us to work on in terms of economic development.”

Cobb said the city doesn’t reap any gross receipts taxes from the sale of gasoline, and that all taxes from gasoline go to the state and federal government. He said the high price of fuel in Hobbs is a disincentive to economic growth.

“Well, it adds to the cost of living, and it adds to the cost of business, there’s no doubt about it,” Cobb said. “I think it is a competitive disadvantage. Maybe as we talk about this strategic partnership with the major oil and gas players, this might be an item that would be worthy of having a conversation about, to see if someone would be willing to invest. If the local retailers could get distribution of their gasoline, if they could pick it up closer to their retail locations, then you would think that the price of gasoline would go down incrementally based on their reduction in their logistics costs.”

Cobb said the high local fuel prices directly impact the energy and production companies operating in Lea County. He met last week with representatives of a newly formed Permian Strategic Partnership, a coalition of 17 major oil companies and related service companies with plays in the Permian Basin that is committing more than $100 million over the next several years to spur additional private-sector investment in the region.

“If we could get the fuel prices down in the community, that incremental reduction could be passed on in the form of the pricing for goods and services, then it would help the consumer and it would also help the business community,” Cobb said. “I would be more than willing to advocate for us coming together with a strategic plan through this strategic partnership to see what we could do to effect the costs of living and the costs of doing business in the Permian Basin, more specifically in Hobbs and Lea County.”

No logical reason

Ron Black, chairman of the Lea County Commission, said there’s no logical reason gas prices are higher in Lea County than elsewhere.

“The gasoline tax in Texas is 28 cents per gallon, New Mexico is 18.8, so they can’t use the tax as an argument,” Black said. “There’s no logical reason why gas prices should be higher here. If there is, no one has explained it to me.”

Black said he’s not fully buying the distribution argument.

“I think that’s part of it, but I’m not sure that that’s the whole problem,” Black said. “I would support anything that people can do to bring the gas prices down because I don’t think it’s right. I can’t think of a logical reason why we’re paying the gas prices we are. It’s been this way for a long time.”

Black said filling up his motor home in Rio Rancho several years ago saved him $53 than if he had filled up in Hobbs.

“At that time, I wrote a letter to the editor and it stirred up things, and gas prices went down, but it didn’t take long for them to go back up,” said Black, who could not run this year for re-election to the county commission due to term limits. “One thing I wish I had done before I had left, I didn’t think of it soon enough, was invite the representatives from Allsup’s, Stripes and Valero, K.W. Fuels, and anybody that is involved, and invite them to come to the commission and maybe explain why gas is higher in Hobbs.”

Black also said the high local costs of fuel raises the cost of living for everybody, and literally drives people to Lubbock.

“I even think it leads more people to shop out of town in Lubbock,” he said. “People say, ‘Hey, I can go to Lubbock and save money on gas and do my shopping.’ Gas is almost a dollar a gallon cheaper in Lubbock than it is here. Right now, it’s about 80 cents a gallon cheaper. There’s surely no reason why gas should be cheaper in places like Vaughn, New Mexico, than Hobbs.”

Black said shopping and re-fueling outside Hobbs may be the only effective way to fight back.

“I’m upset about it just like everybody else is,” he said. “And I’m frustrated because it seems like there ought to be something we can do. Nothing we’ve done has seemed to have much impact. I think probably the only thing that’s going to have any impact is if people start shopping out of town, or it starts hurting the local companies in the pocketbook.”

Costs and taxes

AAA New Mexico spokesperson Daniel Armbruster said regional gas prices vary depending on distribution costs and local taxes and fees.

“And that usually is the main culprit as to why you might see a difference in price,” Armbruster said.

Armbruster suggested contacting local gas station owners for an explanation, but those contacted by the Hobbs News-Sun did not respond by press time.

“If it costs them more to deliver the fuel there, that could be a reason,” he said. “It just depends, based on the market.”

Armbruster noted gas prices in West Texas are also considerably above Texas averages. The average price of regular-grade gas in Gaines County, Texas, was $2.607 Friday, well above the Texas average of $2.175.

“When you look at like Midland, for instance, in Texas, it’s the highest average in the state, yet that is where they produce a lot of oil,” Armbruster said. “But there’s also the costs of refineries, distribution as well, so that is usually why Midland pays more as well. Usually it’s distribution costs and local taxes and fees.”

Jeff Tucker can be reached at managingeditor@hobbsnews.com .

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