By David Bennett, Senior Editor.
After much anticipation on the part of motorists—and hand wringing by local gas retailers—the city of Somerset, Ky. opened its new fuel pumps to the public Saturday, July 19.
Somerset is thought to be the only municipality in the country to sell its own gas.
John Minton, who represents Somerset’s Ward 8, has been pushing a city-operated fueling site for the last three years. The infrastructure was in place because it’s the same facility that fuels the city’s vehicles, school buses. Since Somerset is now converting its fleet to compressed natural gas, revamping the fuel center to accommodate private vehicles seemed in the cards.
Kicking the idea of providing motorists city gas around for nearly three years, the councilman said the fuel center program was the last viable option to help stabilize fuel costs in their town.
“Every holiday, every weekend, I’ve seen gasoline jump here 30, 40, 50 cents on the gallon just over night, for no reason, and our neighboring towns—until the last two or three weeks—you could drive anywhere in a 50-mile radius and buy gas cheaper than you could in Somerset,” said Minton, a Somerset councilman since 1994.
However, the city’s attempt to shift the balance of gas prices back in its favor has been met by heavy criticism from local retailers.
“What is this going to do as far as throwing a monkey wrench in a naturally occurring competitive landscape that is now going to be thrown off kilter by an entrant that doesn’t have to play be the same rules as everybody else,” asked Ted Mason, executive director of the Kentucky Grocers Association and Kentucky Association of Convenience Stores. “I think that’s the huge concern. As you know, the margins in fuels are so thin and you by the time you pay credit card interchange (fees), by the time you make some money of your gasoline you’re doing well. I think there’s a lot of concern from people who do have substantial investments—whether you have a single convenience store in the Somerset area or the larger chains; everyone is concerned about this precedent occurring.”
Read the full article in the August issue of Convenience Store Decisions.