Coastal gas costs fueling criticism.

Byline: Winston Ross The Register-Guard

COOS BAY - Marvin Caldera makes every effort to get to the Willamette Valley before stopping for gasoline. Helen Franklin wants somebody else to open a gas station. Frank Amatisto's towing rates have doubled, thanks to a $700-a-month increase in fuel costs.

They're all peeved about high gas prices in Coos County and they have no idea what to do about it - except write letters to the state attorney general. Theirs and 100 other complaints from area consumers have prompted a state investigation into the routinely higher-than-normal prices at the pumps on the south coast.

In all likelihood, the investigation won't result in any handcuffs or fines, Amatisto knows. He's just hoping to apply pressure on distributors who sell the gas to stations and dealers who own the stations to lower their prices. Amatisto's North Bend Towing has seen its fuel costs rise to $1,200 a month mostly because of a rise in the price of gas.

The only way the attorney general could levy fines or press charges is by proving collusion - that the area's gas dealers and distributors have somehow agreed to keep their prices high even as crude oil prices slide from the summer's peak of nearly $50 a barrel back toward $40.

A similar investigation in Coos Bay in 1991 was closed for lack of evidence, said Jan Margosian, a spokeswoman for the attorney general.

"There was a lot of speculation, but not any evidence of collusion," Margosian said. "You've got to have hard evidence that they talked to each other on the telephone, got together in a meeting - something other than `Gas prices are too high out here.' '

Dealers and distributors say higher costs simply reflect the nature of business and that collusion isn't necessary when all the stations plainly advertise their prices on readerboards.

Still, the state is looking into it, partly because of the rise in complaints - compared with five last year, one in 2002 and two in 2001 - and partly because the traditional reasons for higher prices weren't there this summer in Coos Bay.

"Retailers were competing with each other, refineries were operating at 96 percent of their capacity, there were no emergencies, no catastrophes and gas prices kept going down," Margosian said.

Going down everywhere except on the south coast. Prices in Coos Bay, Reedsport and Florence are 20 or 30 cents higher than stations in Eugene, Cottage Grove or Roseburg, critics say.

On Wednesday, southern coast cities dominated the list of Oregon's highest gasoline prices, according to Web site, www.oregongasprices.com, which collects on-the-ground reports from local consumers at specific stations and posts them live on the site.

Eleven of the 16 highest-priced stations - all above $2.13 per gallon - were between Florence and Coquille. The cheapest prices - from $1.81 to $1.92 - could mostly be found in Salem and Albany.

"It's greed," North Bend's Franklin is convinced. "We're suffering enough economic devastation as it is. A number of people in this community are unemployed and trying to make ends meet. It angers me, that we're loyal customers - we don't have a choice - and they're ripping off people who are suffering anyway."

Caldera heads the Coos Bay chapter of the International Longshore and Warehouse Union. Several members have to drive long distances to find work, thanks to the Coos Bay area's struggling economy.

"We wait until we leave to buy fuel," he said. "It's unfair."

That may be true, said local distributor Scott Bassett, vice president of Bassett-Hyland Energy Co., the county's only locally owned gasoline distributor. But it's the nature of business that some people have to pay more for the same product than others, he said.

First of all, it costs more to bring gasoline to Coos County because there are no refineries in Oregon and the pipeline that transports gas from Washington ends in Eugene.

"It costs me 5 cents a gallon to haul it down here," Bassett said. "The farther you get from the terminal, the more it should be. We're seven hours round-trip by tanker truck - on a good day."

Plus, gas dealers and distributors try to maximize their profits like anyone else - especially when they own more than one station and get lowballed by companies in the valley that provide the product barely above its cost, such as Safeway and Costco, he said.

Bassett, whose family owns stations in Reedsport, Roseburg and Coos Bay, said Roseburg is always the cheapest, "because they're fighting with a Safeway close by."

And on the coast, where dealers suffer through seasonal drops in tourist sales, some stations might charge more in the summer to get them through the winter, Bassett said.

None of which satisfies Amatisto. The towing company owner said he's had to raise his rates - from an average of $40 per tow to anywhere from $60 to $85 - to cope with the higher gas prices.

"There's nothing you can do about it," Amatisto said. "The only thing you can do is hope for some other competition to come in."

But that may not change much, said Bob Whalen, senior economist with ECONorthwest, a Portland-based economic consulting firm. There are certainly "hypermarkets," where Safeway or Costco will mark up gasoline by only a penny or two, knowing that they're likely to make up the profit inside the store - and in Costco's case, with the help of annual membership fees.

But in general, gas prices can vary from city to city with little regard for conventional wisdom, Whalen said.

Usually, gas is cheaper in poorer areas and higher in more affluent areas, he said. Tourist destinations such as the coast tend to see higher prices because dealers know they'll get a significant amount of traffic from far away. Dealers also pay more in the summer because they have a higher-than-normal demand, which often requires extra storage.

Selling gas isn't the cash cow many consumers might think, Whalen said. "If the market were that great, shoot, we should all just run out and open a gas station," he said. "It's a tough business."

Brent DeHart is a Shell retailer and past president of the Oregon Gasoline Dealers Association, a nonprofit group that represents independent dealers. The organization is merging this month with the Oregon Petroleum Marketers Association, thanks to the same industry consolidation that can lead to high prices.

As refineries, distributors and dealers consolidate, they control more of the market and reduce competition. In metropolitan areas, some gas stations are owned by oil companies, cutting out the distributor altogether - which allows the station to charge less and undercut the competition, DeHart said.

There are no oil company-owned stations in Coos County, however. The only dealer that probably could lowball competitors is Wal-Mart.

"They did that the first year they were here," Bassett said. "After that, they figured out they didn't want to do it anymore and they don't price below the average street price in town."

But the same consolidation that allows oil companies to offer cheap gas can also have the reverse effect, said Dave Carlson, spokesman for the American Automobile Association of Oregon and Idaho.

"With oil company consolidation, we went from 50 companies a decade ago to eight or 10 primary ones that control the acquisition, refining and sale of the product," he said.

That cuts down on competition and ultimately increases prices, he said.

"It's a fact of life. If a company buys the crude, owns the facilities that refine the product and the retail stores where it's sold, it stands to reason they're going to get the price they want for gasoline," Carlson said.

The state will examine consumer complaints over the next several months, Margosian said. She could not say when the case might be concluded.

CAPTION(S):

Frank Amatisto, owner of a North Bend towing company, looks over his monthly fuel bill, which he says has forced him to raise his towing fees.