Sunday, February 23, 2003

Ky. gas markups highest in U.S.


Retailers make 15.4 cents profit on each gallon

The Associated Press

LOUISVILLE - Gas stations here are posting some of the biggest markups in the country for gasoline, a marketing firm reported.

Louisville has ranked as high as the eighth most-profitable metro to sell and supply gasoline this month, meaning retailers in the area post some of the biggest markups from the wholesale price they pay for gasoline, according to OPIS, a gasoline market research firm.

But retailers are disputing the numbers, saying that they aren't enjoying anywhere near the profit margins measured by OPIS.

Gas stations in the city added an average of 18.1 cents to each gallon in the week ended Feb. 3., placing it just behind San Jose Calif., in profitability - but ahead of New York.

Kentucky as a whole had the highest retail markup margin in the nation in early February - 15.4 cents a gallon. The state's margin earlier this month was more than three times as high as Georgia's.

The margin in Louisville was nearly 27 cents higher than in Las Vegas, where gasoline was actually selling at a loss of 8.8 cents per gallon.

But some gasoline retailers say they haven't seen profit margins anywhere close to those reported by OPIS.

"It's been perhaps 15 years since we've experienced any kind of margins like that," said Graham Baughman, chief operating officer for Thornton Oil Corp.

"I've got a store in Louisville, and I can tell you it's not more profitable for me" than other markets, said Steve Harper, chairman of Kentucky Petroleum Marketers association and president of Harper Oil Products in Florence.

According to the OPIS numbers, Kentucky remains a great place to do business.

Ashland ranked No. 10 earlier this month in the OPIS report, which changes weekly. In last week's report, Louisville had slipped out of the top 10, but the northern Kentucky area adjacent to Cincinnati had climbed to No. 3. For the year, Louisville ranks 13th most profitable market in the nation - a fraction higher than No. 14, Lexington.

The figures don't mean that gasoline in Kentucky is necessarily more expensive than in other areas, but the profit for retailers has been strong.




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