Seemingly overnight, the gas prices at several Exxon stations in Woodbridge increased by as much as 25 cents. The spike came as a shock to many residents who believed that prices were supposed to go down over the next two weeks and prompted many calls into radio stations and news rooms as to why this was the case. Patch visited one local Exxon station where the manager was willing to explain how gas prices are decided, but only on condition of anonymity.
She explained that gas was provided by Exxon to the individual stations at one price, and then the station owner sets the prices advertised to motorists. According to the manager, there is no law that dictates how much a station owner must charge per gallon of gas. They can set the prices as low, or as high, as they want.
In an ideal world, a station owner would run out of gas around the same time they received a new delivery, which would allow the owner to keep prices in line with what Exxon charged them without losing money. The dilemma that most owners face is that they still have gas in their tanks upon delivery of a new shipment, and if the price of the new gas shipment is lower than the price paid for what is currently in the tanks, then the owner would lose money by lowering the price.
She further explained that changes in the price that Exxon charges the station owners are sometimes communicated less than an hour before it goes into effect, and since owners have no way of knowing how long their current tank level will last, they usually raise prices upon hearing a change from Exxon. She added that the profits from selling gas were only pennies and that selling gas was simply a way to draw consumers into purchasing other merchandise within the station.
She also stated that the latest price communicated by Exxon was actually lower than what she last paid, but she is going to wait until the end of the week before lowering prices to see if there will be another spike.
This, however, does not explain why gas prices in Woodbridge, as well as other parts of Virginia and D.C., were increased overnight.
Dane Roose, a currency trader residing in Woodbridge, was excited to share some insight into what really is going on.
"The stories you hear on the news are not reality," said Roose. "The cost of gas at the pump has nothing to do with how much it is worth, but rather, how much the consumer will pay."
Roose explained that proof of this can be found by watching the fluctuation in crude oil prices as compared to the fluctuation of prices at the gas station.
"When the price of crude oil falls, it takes two to three weeks for prices to drop at the pump," Roose added. "When oil increases, the station changes prices the next morning."
According to John Townsend, the Manager of Public and Government Affairs for AAA Mid-Atlantic, gasoline distributors are blaming the flooding along the Mississippi River for their decision to hike gas prices. They fear that the flooding will further disrupt fuel supplies, but some experts believe that this is just an excuse.
"For the sake of motorists, we most certainly hope that price gouging is not taking place in our area,” said Townsend. “Although proving it is hard, such practices are illegal, unwarranted, and unconscionable. They must not be tolerated.”
A press release by AAA states that "the Oil Price Information Service (OPIS), which provides daily fuel price data to AAA, reports that the eleven flood-threatened refineries along the Mississippi River in the Baton Rouge/New Orleans region account for about 14 percent of the gasoline refined in the United States. However, those refineries are continuing to operate normally, and most of them do not anticipate any production disruption from the flooding."
While the current Virginia law against price gouging only protects consumers when the Governor or President has declared a state of emergency, Townsend advises motorists concerned about the possibility to call the Virginia Attorney General's office at 1-800-451-1525.
The photos illustrate the difference in price between two locations in Woodbridge.