Gas prices dropping

By MIKE WEST, Courier Editor

Commodities trading, not as much supply and demand, is driving down the cost of gasoline in Tennesseee.

In Woodbury, prices were as low as $2.65 a gallon at Cannon Market, 320 McCrary St. It was $2.69 at Davenport's Service Station and Farmers Co-Op on McMinnville Highway. The prices ranged beween those low figures to $3.09 for no-ethanol fuel at Quick Shop at the corner of Main Street and McCrary.

"Enjoy it while you can. Fuel pricing is unpredictable in the global market," said Emily LeRoy, executive director of The Tennessee Fuel & Convenience Store Association.

"The prognosticators don't see a bottom," LeRoy said. "But it's a very complicated equation."

One factor in the price drop is that the U.S. is well on its way to energy independence, which has caused disray at OPEC. OPEC, the Organization of the Petroleum Exporting Countries, is an international organization and economic cartel whose mission is to coordinate the policies of the oil-producing countries.

Fuel pricing is unpredictable and impacted by a number of issues including the U.S. economy, "the strength of the dollar" and even war in the Middle East. A U.S. refinery going off line due to storms or fire can impact the price of all, she said.

"All of those factors, plus many others, impact the price of oil," said LeRoy.

When you buy a gallon of gasoline, what are you paying for? Here's a breakdown of the four biggest cost factors:

* Cost of crude oil is about 48 percent of the price.
* Federal and state taxes make up about 23 percent of the price. (In Tennessee the combined state and federal tax is 39.8 cents per gallon, so when you buy 10 gallons of gasoline you're paying about $4 in state and federal tax.)
* Refining costs and margins is about 18 percent of the price.
* And all other distribution and marketing costs are about 12 percent of the price. This includes transportation, storage, credit card fees (typically 2 to 4 percent), cost of doing business, sales taxes, and the retailer's gross margin.

Actually, nearly 90 percent of the cost of a gallon of gasoline is determined before it even reaches your local convenience store or service station.