TC gas prices 3rd highest in Michigan

By BILL O'BRIEN
bobrien@record-eagle.com

September 19, 2008 12:00 am

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TRAVERSE CITY -- Gasoline prices are falling, though not for motorists in the Traverse City area.

Gas prices hovered close to $4.189 per gallon on Thursday in Traverse City, reflecting some of the highest retail costs in the state, despite a steep drop in wholesale gasoline costs this week.

Steve Sutherland, an oil and gas columnist for the Record-Eagle, said "rack" prices for gasoline -- the cost paid by distributors -- from the Traverse City terminal dropped by about 58 cents since Monday. But retail prices remained around $4.18 per gallon at some local stations, after jumping late last week because of supply disruptions created by Hurricane Ike.

Rack prices, plus taxes, in the Muskegon area fell to around $3.52 per gallon as of Thursday morning, meaning some local suppliers were taking in margins of more than 60 cents per gallon on gasoline sales.

"That's the highest I've ever seen it here," said Sutherland, a former second-generation oil and gas distributor in the area. "There's a lot of money being made today."

According to Speedway's Web site, the $4.18 per gallon in Traverse City was the third-highest in Michigan, trailing only South Lyon near Ann Arbor and the town of Auburn near Midland, both of which were a penny higher. The highest price in Michigan was $4.299 per gallon at one station in Ann Arbor.

Gas prices varied widely around Michigan Thursday, dipping as low as $3.729 in Genesee and $3.789 in Mount Morris, two communities in the Flint area. Prices in most of Michigan, however, remained at $4 per gallon.

Industry officials blamed the wide variation in prices on the fallout from Hurricane Ike that blasted the Texas coastline a week ago.

"I can tell you supplies, because of Ike, are tight," said Linda Casey, a spokeswoman at Marathon Petroleum LLC in Findlay, Ohio, which owns and operates the Speedway stations in Michigan. "Here in Ohio, there are some stations without any gas."

A dozen refineries remain shut down on the Gulf Coast, Casey said, a region that provides the Midwest with about 25 percent of its gasoline. Because of power outages and other cleanup issues, Casey said it's still too early to tell when that region will be operating at full capacity.

Those supply problems are creating significant fluctuations in wholesale gasoline prices, she said, noting that some stations were saddled with negative margins -- losing money on gasoline sales -- only a few days ago.

"Everything's just jumping around," Casey said. "You're going to continue to see this volatility until all this gets straightened around."

Ron George, manager of the Mutual Services Stations in Traverse City, declined comment Thursday on the gasoline prices. Mutual trimmed its price to $4.159 on Thursday.

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