Jamestown is among the most profitable areas in the country for gasoline stations, says U.S. Rep. Brian Higgins, D-South Buffalo, who blames excessive profits on the region's unusually high prices.
Citing figures from the independent Oil Price Information Service, Higgins said Monday that gasoline retailers in Jamestown were making 71 cents of profit per gallon recently, almost 50 cents more than the national average.
''By the process of elimination, we are finding based on industry reports that excessive profit-taking is the root cause of the disproportionately high gas prices here in Jamestown,'' Higgins said Monday during a news conference at his Jamestown office. ''All the data points to excessive profit-taking. This is not information we have manufactured. This is industry information.''
From Dan Nocero's perspective, this couldn't be farther from the truth.
''I would like to know how Higgins does his math,'' said Nocero, who owns Fifth Street Sunoco in Jamestown. ''I'd also like to see him run a service station for one week and make a nickel profit per gallon.''
According to Nocero, the 71-cent figure isn't accurate and only reflects the price at the pump minus the rate at which stations buy their gasoline from wholesalers. What it doesn't take into consideration, says Nocero, is more than 50 cents in state and federal taxes retailers have to pay and additional fuel surcharges from the wholesalers.
Nocero points to a bill issued Nov. 24 for more than $15,342 from his distributor for 7,000 gallons of regular unleaded and 800 gallons of premium. Nocero bought the regular unleaded at a rate of $1.42 a gallon, charging $2.12 at the pump on Monday - a difference of 70 cents.
But the fuel only cost Nocero $11,265 on the bill. The rest of the money had to be paid out in taxes and fuel surcharges, driving up his cost to $1.94 a gallon for the regular unleaded. Add 2 cents in additional sales taxes and half a cent in extra fuel surcharges, and Nocero says he's paying $1.97, leaving him only 15 cents per gallon.
Stan Plymel, owner of Stan's Main Exxon on North Main Street, faces the same sort of challenges. According to Plymel, he bought his most recent shipment of regular unleaded for $2.07 a gallon and is selling it for $2.09. Factor in the several cents it costs per gallon every time a customer uses a credit card, and he's actually losing money when he sells gasoline, he says.
''We're all on hard economic times. We're dealing with the same situation as the people pulling in and buying gas from us,'' said Plymel, who has been in business for 36 years. ''These are my friends. I'm not going to take advantage of my friends.''
For gasoline dealers like Fifth Street Sunoco, Chet's Mobil across the street and Stan's Main Exxon, selling gasoline is not very profitable, business owners say, especially when local property taxes and costly overhead expenses are factored in.
It could be a different story for company-owned retailers in the area, like Tops on Washington Street, Lake County Dairy locations, the stations owned by Schmidt Sales and the area's Kwikfill locations. They skip the middle man, says Nocero, allowing them to buy gasoline at a much cheaper rate, sell far more gasoline and take in much more profit.
''Dealers sell 12,000 to 15,000 gallons a month. Company-owned stations are selling 100,000 to 125,000 gallons a month,'' Nocero said. ''They're skipping the middle man. ... They buy cheaper than us since there's no middle man.''
On Monday, Nocero dropped his price to $2.12 when Tops down the street dropped its own price to $2.09. According to Nocero, the 15 cents he keeps for every gallon is just enough to get by.
''I can't match them and survive, but I can stay close to them,'' Nocero said of company-owned stations like Tops.
As the price of gasoline continues to drop around the nation but at a much slower rate in Western New York, Higgins is working to find out why that disparity exists. He is calling on the Federal Trade Administration to aggressively investigate the matter, though retailers object to the blame he is placing on them.
''Every extra penny in gas prices paid by Western New York consumers has an enormous ripple effect on an already distressed economy,'' Higgins said. ''This region must again stand up for ourselves and demand justice on this matter.''
A similar effort at the state level is targeting wholesalers. A state law recently went into effect banning zone pricing, a practice reportedly employed by the gasoline industry to artificially inflate the price of gasoline in certain regions if companies think the markets will bear it.
The state attorney general's office has been charged with enforcing the law by fining companies $10,000 if they are found to be discriminating based on geography when it comes to wholesale prices, though state Sen. Cathy Young, R-Olean and a strong supporter of the measure, says it will be up to consumers to ensure the attorney general's office is made aware of price disparities.