Why Tahoe drivers pay more at the pump | SierraSun.com

Why Tahoe drivers pay more at the pump

Julie Brown
Sierra Sun
Emma Garrard/Sierra SunKen Payton fills his truck up with diesel at the Shell station on Donner Pass Road in Truckee Tuesday. The Auburn resident often works in Truckee, and says he pays 30 cents more a gallon to fill up in the Truckee-Tahoe area.
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The AAA Gas Price Report for December revealed no big surprises ” filling up your tank in the Tahoe-Truckee area still costs more than it would in Sacramento or the East Bay.

But local gas station managers and owners say high gasoline prices don’t just materialize out of thin air.

Typical business expenses ” most notably, transportation and operating costs ” drive up the local price per gallon, which reached an average $3.50 a gallon in Tahoe City this month, according to the report.

Shipping a load of gas to a Tahoe gas station from Sacramento often costs more than it would to a station in Mod-esto for one simple reason ” distance.

“We’ve said that for a lot of years, and it’s still true,” said Rob McAuliffe, who manages the Donner Park 76 station in Truckee. “All our gas comes from Sacramento … the Chevron has their blend, we have our blend. But it all comes from the same place.”

The hassle of mountain driving, especially on slick winter days, only adds to the cost of transportation, McAuliffe noted.

“It’s just one of those things where all we can do is just pass [the cost] along,” he said.

The charges don’t stop racking up when the gas arrives. Operating a business in the Tahoe-Truckee area is expensive ” a facet of the economy not just felt by gas stations, but by local business owners across the board.

The volume of sales often falls below the cost it takes to operate a full-service station in Tahoe, said Bill Sharbrough, who owns the Chevron station in Tahoe City. Stations in Sacramento and Auburn sell more gas, while operating at lower margins.

“That is the cost of having a small town,” Sharbrough said. “It’s real.”

And today’s sky-high prices further discourage the volume of sales. Stations made more profit when the price-per-gallon was in the two-buck range because customers use more gas when it’s affordable, McAuliffe said.

“Our hands are really tied when the price is this high,” he said. “We’re just not making anything.”

Many gas stations rely on sales beyond gasoline to support their business, said Sean Comey, spokesperson for AAA of Northern California.

“Despite today’s incredibly high prices, what many consumers may not appreciate is the very slim margin that most retailers are operating on,” Comey said. “They can make as much money serving you a cup of coffee and a donut as they can selling you a gallon” of gas.

Physics doesn’t help gas stations recuperate a profit either.

It’s a law of nature that gasoline contracts under colder temperatures and expands when it’s warm. And that translates into dollars for gas station operators.

A 60-degree standard is used to measure the gas at the distribution center, and the retailer is charged accordingly.

But when the gas is shipped, especially to climates colder than 60 degrees, the volume may change. And when the gas shrinks, as it does when it comes up to Tahoe’s colder temperatures, the retailer receives less product than what they paid for, Sharbrough said.

“That’s a factor that the stations in the Bay Area, Central Valley and Sacramento do not have to contend with,” Sharbrough said. “They don’t have that loss in their pricing structure.”