By Andy Soergel and Callie Northrop
Gasoline prices in Lexington dipped this week to their lowest levels since January, according to data from GasBuddy.com.
The average price of a gallon of gasoline in the U.S. on Sept. 23 was $3.49, according to the website. Virginia’s average price per gallon sat well below the national average, at $3.18. Lexington’s average was at $3.19.
Falling prices at the pump are due in part to East Nelson Street’s new Sheetz gas station and convenience store, which posted $3.09 per gallon for regular, unleaded gasoline on Sept. 23. Over the preceding two weeks, Sheetz consistently undercut prices of nearby competitors.
Sheetz, a gas station chain headquartered in Altoona, Pa., opened a branch in Lexington on June 27 and has created almost 40 jobs, said Sheetz public relations specialist Monica Jones. The chain employs upwards of 16,000 workers at 456 stores, with six stations in Virginia and a seventh under construction in Fredericksburg, she said.
Jones said Virginia has proven to be a reliable market for Sheetz, and Lexington’s first few months have been no exception.
“Lexington’s location is doing pretty well, overall. A lot of people know Sheetz from living in other places, so main arteries of interstate and high-profile spots are always of interest,” she said. “Having schools nearby is a great thing. Those are a lot of who we’re looking for to come into the store.”
Because of the store’s low gas prices, a full convenience store, and 24-hour access, many in the community are welcoming the station with open arms. Ellen Gleason, a junior Washington and Lee University student from Santa Barbara, Calif., said Sheetz’s gas prices and merchandise selection are hard to beat.
“Even though Sheetz is not the closest station to my house, I always drive the extra distance to get my gas there,” she said.
Sheetz’s gasoline prices per gallon are typically listed two to 10 cents cheaper than competing Exxon, Citgo and BP stations in the immediate area, according to GasBuddy.com, a consortium of free websites that track gasoline prices. This has forced competitors to start slashing prices to keep customers.
But rising competition is not the only variable lowering costs at the pump, said Patrick DeHaan, a petroleum analyst and contributor to GasBuddy’s fuel-tracking blog.
“Gas prices are at their highest in the summer when there’s more travel. And, with some limited exceptions, they tend to decline during this time of year,” he said. “But there are a lot of other factors at work here, too.”
DeHaan said prices can fluctuate through the summer and into November during hurricane season. Strong storms in the Gulf of Mexico disrupt refinery activity and make domestic oil scarce. This can raise gasoline prices 25 to 50 cents per gallon virtually overnight, he said. Fortunately for travelers, weather in the Gulf was mild this summer.
“With a lack of tropical activity, it’s allowed refineries to continue producing without shutting down facilities,” he said. “Domestic oil production has helped oil prices not rise more significantly. Earlier this month, the U.S. produced more oil domestically than we imported. That hasn’t happened for twenty years.”
Despite domestic success, the U.S. still imports a substantial amount of foreign oil, DeHaan said. So foreign affairs can still agitate prices at the pump. Turmoil surrounding Syrian President Bashar al-Assad and his regime’s alleged ties to chemical weaponry had some analysts expecting oil prices to go skyward, DeHaan said. So far, this has not been the case.
“Syria’s a very limited player in oil. It certainly impacted prices here, but to a lesser extent than situations like Libya, Iraq and Afghanistan. Prices have spiked to a much more significant degree in the past,” he said.
Despite unrest in Syria, domestic gas prices continue to drop.
Average gasoline prices in Virginia have steadily dropped from $3.68 at the beginning of July, according to the website. DeHaan said the state’s dropping fuel costs are due in part to the state’s new gasoline-tax structure, which took effect that same month.
Under the new legislation, Virginia did away with its fixed 17.5 cents-per-gallon gasoline tax. In its place came a 3.5 percent wholesale tax on regular unleaded gasoline and a 6 percent tax on diesel fuel. The state also imposed a general sales tax increase of 0.3 percentage points, from 5 percent to 5.3 percent, according to the Virginia Department of Taxation’s website.
These changes are intended to put more revenue in the hands of the Virginia Department of Transportation and, ultimately, enhance road construction and maintenance. But they have also cut fuel costs for many local motorists. Lexington’s average gasoline prices, which peaked at $3.36 per gallon in July, are now at their lowest levels in months.
Despite all of the variables that tug at travelers’ gasoline expenses, DeHaan said not to underestimate the new Sheetz station’s effect on the Lexington gasoline market.
“Big chains like this use their economies of scale. They can very easily come in and assert dominance in the market by lowering their price and drawing people into their store,” he said. “They’re kind of being the alpha male of gas stations.”