Why are they so high in Vicksburg?.

‘It’s competition. Period.’.

In a few weeks, pump prices have been slashed in Vicksburg and nationwide, by as much as 50 cents from the brink of the exasperating $3 benchmark looming over drivers in late August.

Slower to narrow, however, has been the gap between pump prices in Vicksburg and in surrounding towns, notably Jackson, where consumers only an hour away routinely pay 15 to 20 cents per gallon less than in the Hill City.

Since January, the average difference in prices between Jackson and Vicksburg has been 2.8 cents, said Keith Bell, vice president of fuel sales for The Pantry in Sanford, N.C., which owns more than a dozen service stations in Vicksburg. By the start of summer, however, when a gallon of regular unleaded gas broke the $3 barrier in Vicksburg, it was under $2.90 in most of Jackson, and before a sudden plummet in Vicksburg pump prices Tuesday, the disparity had only grown.

On Saturday, the average price of a gallon on regular unleaded in Vicksburg was $2.48; in Jackson, it was $2.27; and in Tallulah, it was $2.27.

&#8220There’s a lot of different answers,” said Jerry Wilkerson, of the Mississippi Petroleum Marketers and Convenience Stores Association.

Generally speaking, prices are controlled by basic supply and demand and competition, he said – &#8220same thing as newspapers, blue jeans, washing machines or anything else. They’re priced at whatever the company can get for them.”

The nature of the competition is not the same in every market, though. One longtime Vicksburg service station owner no longer in the business, who asked not to be named, called gas and oil &#8220a very high volume, low margin business” – and the tougher the competition, the less the margin can rise above cost.

In that respect, he said, large companies that are &#8220vertically integrated” – that is, they cut the middle man by controlling all or most facets of the business, from research to mining and drilling, transportation, refining, marketing and often retail, rather than focusing on one aspect – can afford to make up lower margins with higher volume.

&#8220In small town markets the volume’s too small for those guys to be there. If you don’t have that high volume, you don’t want to be in the market where those guys are,” he said. &#8220More populous markets always were more competitive, where you had more layers and more folks involved in the distribution chain. We had a bunch of stores in Jackson and we had to get out because things were so tight over there.”

Home-grown retailers still in Vicksburg, though, said they find the going plenty tight in a smaller market that offers less cushion on prices above cost, because the few cents on a gallon can’t be made up as easily. Here, said Richard Waring, one of the second-generation owners of Waring Oil Company, pricing can sometimes resemble a game of &#8220follow the leader.”

&#8220The retailer on the street is going to base (the price) on his competition down the street. That’s it.” Waring said. &#8220Jackson’s got a lot more competitors. A retailer in Jackson can live on smaller margins because there are 10 times more people there.”

Waring pointed to sudden decreases in price Tuesday, which he said were caused when a BP station on U.S. 61 South dropped its prices 12 cents, to $2.49 for a regular gallon.

&#8220The rest of the market followed it,” Waring said. &#8220It’s a prime example.”

Waring said the store was leased by John Moak of Moak Petroleum, but Moak said he could not comment on pricing.

Until very recently, the retailer down the street in Vicksburg could be found, literally, down the street: most stores in town were owned by the Waring and Morrison families and run by generations of Vicksburg natives.

That’s less so since the turn of the last decade, when R.R. Morrison & Sons Inc. sold 26 Fast Lane stores in central Mississippi, the Gulf Coast and in Louisiana, including all five stores in Vicksburg, to The Pantry Inc. of Sanford, N.C., the second-largest independent owner of convenience stores in the country, in December 2000. In February of this year, The Pantry also bought out three of the Warings’ Interstate Food Stop convenience stores in Vicksburg, along with 36 other Waring locations in Mississippi and Louisiana.

Among The Pantry’s Vicksburg holdings are Kangaroo stores at 574 U.S. 61 N, 4888 U.S. 61 S, 4150 Washington St., 3400 Halls Ferry Road and 3140 Indiana Ave., as well as Texaco stations at 3036 Indiana Ave. and 4460 Clay St. and the Chevron at 725 U.S. 61 S.

The company grossed $62.5 million from its nearly 1,500 stores over the first nine months of fiscal year 2006, almost doubling the number over the same span in FY2005.

&#8220They’re the ones that control this town,” said Benno Van Ryswyk, manager of Hill City Oil Co., said of The Pantry. &#8220My one or two stores is nothing compared to them.”

Bell said the company uses the same factors as local retailers – competition and the costs it incurs buying and moving fuel – in determining prices. There may also be differences in prices at various pipeline terminals where trucks receive fuel. Local and regional managers advise The Pantry’s corporate management on setting costs in each market, which can sometimes lead to different prices at different Pantry stations in the same city, depending on location.

&#8220The station manager doesn’t make that decision, but he is our eyes and ears on the ground,” Bell said. &#8220They know that Station ABC down the street are the competitors and what their prices are.”

The Warings continue to operate one service station in Louisiana – close enough to the river to still set prices based on competition in Vicksburg, Richard Waring said – but otherwise serve as suppliers of oil, gas and lubricants to stations in both states.

A few other local, independent companies continue to operate, such as Moak Petroleum, which Moak said leases and supplies about a dozen stores in Vicksburg, and Hill City, which operates one store on U.S. 61 South and one at Fisher Ferry and Halls Ferry roads.

Locals, however, claim prices are largely out of their hands, or over their heads.

As much as 90 percent of pump costs are added on the front end, Wilkerson said, in the price of oil and refinery costs.

&#8220Crude oil is the major component in the price per gallon,” Waring said. &#8220If you keep an eye on the price of crude oil, whenever you see the barrel go up a dollar, the pump price is going to go up 2 or 3 cents.”

Lately, Bell said, the price of crude is falling because of increased supply and stable demand, and the prices are following.

Beyond the fuel cost – which is largely affected by global markets, speculation and international cartels such as the Organization of the Petroleum Exporting Countries – &#8220there are many pieces to the puzzle,” Wilkerson said.

Prices can fluctuate day to day, brand to brand, market to market and seller to seller, he said. Transportation costs can vary depending on the distance to the nearest terminal; for Vicksburg, though there is a terminal at the city’s port, that usually means shipping from Greenville, Collins or Meridian. There are also state and federal taxes, which can add up to 37 cents to the cost of a gallon, according to Waring.

Sales outside of fuel can have an effect, too, Wilkerson said.

&#8220They can’t keep those places open on the margin they make on gasoline. They have to make it on the inside,” he said. &#8220That’s the reason you see so many co-branded stores, like a Wendy’s or something like that inside, and you see all these new coffee deals.”

But again, Wilkerson’s explanation returns chiefly to the market, competition supply and demand.

&#8220People fuss and complain, but the reason they pay more is that they’re willing to pay more,” he said. &#8220They use it. If they quit buying, the demand goes down, and the price goes down.”

Waring said the price shifts were often beyond explanation, even to insiders.

&#8220It’s different in every town,” he said. &#8220It’s strictly what you think you can get for it. But if you think you can sell it for 10 cents higher than the guy on the street, you’re crazy.

&#8220It’s competition, period. You can try to read anything into it you want to. It’s competition. Period.”