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Amid falling gas prices, South Florida sees highs and lows at the pump

Gas stations along Northwest 167th Street near First Avenue sold gas for $2.09 a gallon last week, among the cheapest in South Florida.
Gas stations along Northwest 167th Street near First Avenue sold gas for $2.09 a gallon last week, among the cheapest in South Florida. dlima@miamiherald.com

Seric Fallon lives in the Edgewater neighborhood near downtown Miami, but he avoids filling up at gas stations around his home.

Instead, he stops at the Cloverleaf Valero on 167th Street in North Miami Beach before heading home from work.

“It’s strategic that I pump gas here,” said Fallon, a 38-year-old lawyer looking to save a few bucks.

Last week, Cloverleaf Valero charged $2.09 for a gallon of regular gas, among the cheapest in South Florida. Even though gas prices continued to drop nationwide last week, drivers often travel across town to avoid pumped-up pricing.

In South Florida, a place of extremes in housing and food, gas prices stretch across two worlds: the least expensive in working-class neighborhoods, the most expensive in tourist areas where land is scarce and costly.

$2.14 Average gas price in Miami area

$2.09 Lowest gas price in Miami area

$3.89 Highest gas price in Miami area

And sometimes the difference could be 40 cents, or even a buck or two a gallon.

In one case, a gas station in Little Haiti was selling gas for $1.89 a gallon recently. Across town near the airport, the price was $3.89. The suburbs, including Kendall and West Broward, tend to fall in between, with prices around $2.40.

Even prices on the same street can vary widely.

On Sunday, across a seven-mile stretch of Northwest 36th Street, gas sold for $2.17 a gallon at stations in lower-income Allapattah. A couple miles west, the price shot up to $2.35 at a major commercial thoroughfare, Northwest 27th Avenue, closer to the airport. Three miles west, along the southern rim of Miami Springs, three stations priced a gallon at $2.25.

And at the foot of the Palmetto Expressway at Milam Dairy Road near Doral, two Shell stations across the street from each other battled it out in an old-fashion 1970s-style price war: $2.49 a gallon at the station on the north side of 36th Street and $2.55 a gallon on the south side.

Last week, a gallon of regular fuel averaged $2.14 in Florida, slightly down from the week before, according to AAA, which has projected continued falling prices. On Sunday, the average price per gallon was stable at $2.30 in the Miami area, according to GasBuddy, a digital service that aggregates gas prices around the country by region.

Here everything is high. The rent is high, the insurance is high, the taxes are double.

Ramesh Dadlani, owner and operator of a Chevron station near the Miami airport

Why the pricing gap across South Florida?

For gas station operators, it comes down to what customers will pay and the basic cost of doing business.

Gas prices have been dropping nationwide because of geopolitics and the changing seasons, but pulling into any old station doesn’t automatically guarantee the best deal.

“Wholesale price and taxes are the twin pillars of what determines the price at the pump,” said Tom Kloza, chief energy analyst for Oil Price Information Service, a New Jersey firm that tracks energy prices.

Oil companies post their wholesale prices on their websites, where franchise owners can make their purchases for the following day. Timing of purchase is crucial because the gasoline market is erratic, said Ben Brockwell, director of data, pricing and information at OPIS.

“Oil prices have gotten to be very volatile on a day-to-day, week-to-week, month-to-month basis with double-digit swings,” he said. “I think now that’s reflected at the retail level.”

The Florida gas tax runs about 36 cents per gallon, as of July, which is higher than the national average of 28 cents. Real estate and insurance costs also play a role in price-setting.

There’s too damn much production and too damn much supply. There hasn’t been enough demand growth to soak it up.

Ben Brockwell, director of data, pricing and information at OPIS

Gas is generally cheaper in working-class areas like 163rd Street in North Miami Beach, near the Golden Glades Interchange, and more expensive in touristy places including Miami Beach and the stretch of Le Jeune Road across from Miami International Airport.

“Gas stations on Le Jeune have been gouging people for years,” said Fallon, the Edgewater resident who favors a North Miami Beach gas station. “All that can be chalked up to the rental-car places. They want to get the tourists.”

Those on the hunt for a bargain might find themselves going out of their way, but that’s not the case for every driver.

“There’s an awful lot of people who don’t buy on the basis of price,” he said. “They buy on the basis of convenience, and they’ll pay 10 to 15 cents more on their way in.”

But even those who are not particularly price-sensitive are enjoying savings. A surplus of oil is the main reason prices are tumbling, oil expert Brockwell said.

Numbers provided by the U.S. Energy Information Administration show that U.S. crude oil production has increased more than 60 percent since 2009. In November 2014, the Organization of Petroleum Exporting Countries agreed to meet U.S. oil production head-on, causing an additional uptick in oil supply and a drop in prices worldwide.

“There’s too damn much production and too damn much supply,” Brockwell said. “There hasn’t been enough demand growth to soak it up.”

Drivers can also thank the change in seasons for the low prices they’re enjoying at gas stations. AAA said at this time of year, fewer drivers hit the road on trips.

Gasoline also is sensitive to environmental conditions like temperature and must be modified accordingly. Sept. 15 marks the transition from a summer gasoline-blend to a fall blend, which has a lower evaporation threshold than its summer counterpart and is cheaper to produce, according to AAA.

Additionally, this year’s tame hurricane season has allowed oil refineries to work uninterrupted, enabling a further dip in gas prices.

But fluctuating gas prices have no effect on some locations, said Ramesh Dadlani, owner and operator of the Chevron station at 2545 NW 42nd Ave. near the airport.

At Dadlani’s station, regular gas ran $3.89 a gallon last week — the same price for the last two years.

Dadlani’s customers are predominantly out-of-towners in a rush to return their rental cars and catch their flights.

Returning a rental car with the tank on “E” can be pricey: Advantage Rent-A-Car charges $7.99 per gallon to refill the tank. Royal costs hurried drivers $6.95 per gallon. Payless comes in at $9 per gallon.

To travelers in a rush and facing those costs, gas for under $4 a gallon can seem downright cheap.

Dadlani, who has owned the combination gas station, car wash and convenience store since 2003, said he’s frequently accused of price-gouging.

“I tell them to look up ‘gouging’ in the dictionary,” he said.

Price-gouging occurs when customers have no option but to pay a higher price. Dadlani’s business is a block away from cheaper gas — and drivers who fill up at those stations can save more than a dollar per gallon.

Dadlani said his prices aren’t as arbitrary as customers may think. They’re based on operating costs, which he said run about $60,000 a month.

“Here everything is high,” he said. “The rent is high, the insurance is high, the taxes are double.”

Dadlani said he even pays a small fee for terrorism insurance because of his station’s proximity to the airport.

After Hurricane Wilma hit South Florida in 2005, Dadlani was accused of price-gouging. When inspectors arrived, he showed them his record of high prices — and they cleared him, he said.

“Let me tell you something. I feel guilty when I don’t pay my taxes. I feel guilty when I don’t pay my employees. I feel guilty when I don’t pay my insurance,” he said.

“I don’t feel guilty about my prices.”

Follow the reporters on Twitter @dtdlima and @harrisalexc

U.S. field production of crude oil

Year

Barrels

2010

1,998,583

2011

2,057,608

2012

2,370,114

2013

2,720,782

2014

3,182,583

Source: U.S. Energy Information Administration

Prices at the pump

Here is a quick look at some gas prices across South Florida as of Sunday, according to gasbuddy.com:

$2.89 — Chevron on Abbot Avenue, Miami Beach.

$2.17 — Valero on North Miami Avenue and 71st Street, Miami.

$2.47 — Shell on SW Eighth Street and 37th Avenue, Coral Gables.

$2.25 — Citgo on NW 27th Avenue and 28th Street, Allapattah.

$2.79 — Shell on Biscayne Boulevard and Northeast 36th Street, Midtown.

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