Q&A of the Day – Why Are Palm Beach County’s Gas Prices the Highest in Florida?
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
Social: @brianmuddradio
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Today’s Entry: Hi Brian, I continue to enjoy your morning show and the stories you bring. Each day you report on the state and local gas prices. And, each day Palm Beach County is the highest in the state. However, I am sure you are aware, it is quite easy to find prices lower than even the state average in the area (not just Costco etc). What I have found is that prices along Northlake Boulevard and PGA Boulevard in particular are usually OVER $1 higher per gallon than others in the area. For example, Northlake and Military can be around $4.39 right now while Blue Heron is $3.69. Currently the station out by Ibis is $4.79 for regular, while Okeechobee Boulevard in Royal Palm has gas under $3.70. It seems most of Palm Beach County gas stations are really in line with the rest of the state, but that our average is thrown off by this group of stations that are really high. Have you looked into this any closer? Would this be considered "gouging" in any scenario? Looking forward to a possible Q&A story on this.
Bottom Line: Great question. Great observations. Let’s get to it. Yes, Palm Beach County has consistently had the highest gas price in the state of Florida this year. In fact, there have only been a total of two days thus far this year in which another county had more expensive gas than what we’ve been forced to pay. However, you’re also right that there can be a huge variance based on location throughout our communities. In understanding what’s happening locally it first helps to understand what we’re actually paying for when we’re buying a gallon of gas. A quick check of gas prices yesterday revealed that while the average price across the county was $3.75, the lowest price for regular unleaded was $3.31 per gallon with the highest checking in at the $4.79 you’d referenced. Obviously, location is key when it comes to what you’re paying.
Before diving into the local nuisances let’s first breakdown the big picture cost of what we’re paying for when we buy a gallon of gas. It's dynamic based on the variances in the cost of oil and refining at any given time.
Here’s the most recent breakdown via the US Energy Information Administration:
- 50% - oil
- 24% - refining
- 15% - taxes
- 11% - distribution & retail marketing/margin
We tend to think of oil being the end all be all when it comes to the cost of what we pay at the pump, however as illustrated, while it’s the biggest driver of cost – it's still just half of the equation. But what begins to make Palm Beach County’s gas prices higher than the averages across the state and the country are the costs of the third and fourth biggest drivers, starting with taxes. One of the reasons Palm Beach County has the highest average gas price is due to the county imposing the highest gas tax allowable under state law. 57.7 cents per gallon of what we pay at the pump is just to satisfy federal, state and local gas taxes. That said, we’re not alone in that regard. There are other county governments which likewise impose the maximum, so that alone isn’t the answer – just a contributing factor. That takes us to distribution and retail marketing & margin.
Palm Beach County’s prices are always higher than our neighbor to the south, Broward, with all other factors being equal, for one very specific reason. No gas comes into this county that isn’t transported by trucks. Broward consistently has the lowest gas prices in South Florida due to proximity to Port Everglades, which is where all of South Florida’s fuel comes from. It’s just a matter of fact that the further the transportation of the fuel is by truck, the more it costs to get it there and thus the more we pay in the end. Other parts of the state that are more geographically advantaged from a distribution standpoint have lower distribution costs. Palm Beach County is naturally disadvantaged this way. And that takes us to the other part of the 4th consideration. Retail margin.
The top cost consideration for gas stations is consistently location. Palm Beach County has the 4th most expensive commercial real-estate prices in the state. And obviously, the most desirable real-estate locations for gas stations will carry especially high price tags in a county as expensive and desirable as ours. In your example, property near Ibis as opposed to Blue Heron, is clearly going to being significantly more expensive, and thus the price at the pump at those locations will reflect it. This is often true of prime locations directly off of I-95 as well. And that’s prior to factoring in significant cost factors like taxes. Palm Beach County’s property taxes are the 2nd highest in the state. And obviously local taxing authorities can play a significant role in how high that tax can be. Ditto with local sales taxes which can be imposed as well.
Putting all of this together helps paint the picture as to why Palm Beach County consistently has the most expensive gas prices in the state and why there’s a considerable variance within our community. And while much of it is out of our control, some of it, a la taxes imposed both on gas and on property, is within local control and could be improved. Over the past year, despite the huge spikes we’ve had in gas prices, the low end of the retail margin for a gallon of gas has been three cents per gallon and the high end has been seven cents. Those are microscopic margins in the low single digits to at times even being below 1%. Regarding concerns of price gouging specifically... The law applies to the price charged during a declared state of emergency. Thus, currently, without a state of emergency, price gouging standards don’t apply.