Station Owners Set Price for Gasoline

Reader Ray P. Keesler of La Crescenta asks why gasoline prices do not fall as fast as they rise [“Crude Price Drop Not Seen at Pump,” Letters, Oct. 7].

The answer is quite simple, although it does not conform to preconceived ideas of a conspiratorial monopoly, price gouging, etc.

The vast majority of gas stations are operated by independent businessmen, who either own or lease the stations, and buy their gas at wholesale and sell at retail, just like other retailers. It is they who determine the final retail price of gasoline. In fact, it is against the law for oil companies to dictate the price to their dealers. The gas station operator is merely trying to maximize his profit margin, which in other industries is good, but for gasoline is somehow evil.

When the wholesale price rises, the dealer will raise his price as high as he can so he can sell the lower-priced gas still in his tanks at the higher price. When wholesale prices drop, the reverse is true, he will keep the price as high as possible when selling the lower-priced gas. Of course, all of this is subject to competitive pressures.

Andrius V. Varnas

Redondo Beach