Just recently when Traverse City was charging $3.319-plus, the national average for unleaded fuel was only about $3.17 a gallon. Yesterday, while Traverse City was at $3.109, Flint's average was only $2.919, according to AAA. Even Cedar in Leelanau County was at $2.999 Thursday and still making a hefty profit!
Then and now.
The Traverse City market is different than that of downstate, since we are a major tourism area. I'm sure you've noticed this market is much more volatile with prices continuously rising and falling.
As a child, I lived in Auburn Heights, now known as Auburn Hills. Most summer weekends we came north to Leelanau County for the clean air, water and just to get away from all the people. It seems they too had the same idea.
As far back as I can remember, Traverse City was always about 25 cents higher than downstate. I'm 54 years old now and I remember purchasing premium gas for my 1968 high-performance Cougar XR7 for 17 cents per gallon in the Detroit area. The price wars were brutal back then.
The higher prices and margins remained until the summer of 1975, when self-service and the almighty convenience store hit Traverse City. At that time the corner garage disappeared, margins were greatly reduced and Traverse City came in line with most of the state. Gasoline prices didn't just get more reasonable, the pendulum swung all the way from hefty margins of 20 to 30 cents or more to about 5 cents per gallon, even less at times. This pricing trend stayed in effect for almost 30 years until the day after Hurricane Katrina.
Ah yes, Hurricane Katrina, a time of sadness for this country as we sat glued to our televisions watching the elderly, the handicapped, the children and families trapped on rooftops and clinging to trees, hoping and praying someone would save them. Most of America felt the pain. Many went to New Orleans to help where they could while others sent money. Yes, it was a sad time.
In Traverse City though, while most watched in disbelief, others were busy capitalizing on the crisis and even hiding behind it while they bumped their average profit margins by as much as eight times. I remember the media interviewing local fuel jobbers and hearing them say, "It's not me, it's the storm, it's supply and demand," and my favorite, "It's major oil." (paraphrased). Yes, the day before Katrina, as I have said here before, margins were approximately 5 cents per gallon. The day after it was 41-plus cents per gallon.
If you ask, there are always explanations such as their operating costs. Or maybe they will just deny the profits. But local jobbers have always had operating cost, and yes, when the rack price goes up it will affect cost, which is why they raise the price also. But we are talking profit margins that increased eight times overnight!
OK, it's been a couple years now of huge margins and the storm is over. Tell me the reason that the margins have now increased to 40, 50, 60 cents per gallon. The weather is good, the war is progressing, so why the newest increases in margins?
Yes, you heard it right. When buying out of North Muskegon in recent days, figuring in the various discounts, local margins are in the 50-plus cent range. Over the past few weeks you have seen the retail prices slowly fall by 15 to 20 cents per gallon, while in reality, the cost has dropped by approximately 60 cents per gallon. Come on Traverse City, follow the money and don't be fooled. The cost is falling but the margins are climbing. The restraint is gone, the responsibility is gone, and profiteering is definitely in!
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