NOCO Express - Gasoline Convenience Stores

The gasoline you purchase from NOCO Express convenience stores is one of the main products refined from crude oil. If independent chains such as NOCO Express were not in the marketplace, you can be sure stations operated by the major oil companies would be charging higher prices for gasoline.

Q: What are consumers actually paying for at the gas pump?

There are many expenses involved in producing gasoline and delivering it to retail gasoline stores. These include the basic cost of crude oil, refinery processing costs, distribution and marketing costs, and taxes.

1. Crude Oil: The major expenditure is the cost of oil itself. This accounts for nearly 44 percent of the retail price of gasoline. The Organization of Petroleum Exporting Countries (OPEC) consists of 11 countries that rely heavily on the oil industry to bring in revenues as their main source of income. OPEC accounts for about 40% of the world's production of crude oil and about 67% of the world's estimated crude oil reserves. OPEC has the power to increase or decrease both price of crude oil and production of it.

2. Taxes: Federal, State, and local taxes are another large portion of the retail price of gasoline. The total amount of these taxes varies from state to state, but New York State is among the highest. Not included in this figure are the different city and local county taxes. For instance, the sales tax in Erie County is 8.75%. When gasoline prices are higher, that means the local and state governments are receiving more money in their coffers. NOCO Energy and NOCO Express continue to urge our elected leaders to reduce the taxes paid on a gallon of gasoline. We are committed to passing on any reduction in taxes directly to the consumer.

3. Refining costs: The cost to convert the crude oil into gasoline is about 14 percent of the total cost. This expense varies from region to region because some areas are required to use special blends of gasoline. This reformulated gasoline is cleaner-burning gasoline blended with ethanol, aimed at reducing air pollution and smog in cities such as Chicago, New York and Los Angeles. Some people think that NOCO Energy Corporation is in the refinery business because of our tanks on the 190 Interstate in Tonawanda. These tanks are only storage facilities. At one time, Buffalo was the location for many refineries but changes in the industry have resulted in the closing of all refineries in the area.

4. Distribution, marketing and retail station costs: After the oil is refined, most gasoline is shipped by pipeline to terminals near consuming areas. The gas is then loaded into trucks for delivery to individual stations such as NOCO Express stores. The reformulated gas containing ethanol, which is corrosive, cannot be transferred by pipeline and must be delivered entirely by truck or boat. Each of which is several times more expensive than pipeline transport.

Some retail stations are owned and operated by refiners such as Mobil and Sunoco while others such as NOCO Express are independent businesses that purchase gasoline to sell to the public. The actual price on the gas pump reflects the retailer's purchase cost for the gas and the other expenses of operating the service station. Factors contributing to additional individual station costs include local market conditions, desirability of the location, and the marketing strategy of the owner. If independent chains such as NOCO Express were not in the marketplace you can be sure that stations operated by the major oil companies would be charging higher prices.

Q: What causes gasoline prices to rise and fall so often?

Supply and demand plays a major part in the fluctuation of gasoline prices. When demand is high, the suppliers usually raise the price to make a profit. Consumers do not have the choice of substituting different fuels for gasoline so they are forced to pay whatever the price of gas is. If the supply of gasoline declines unexpectedly because of refinery problems or a pipeline break, gasoline inventories (stock) will decline rapidly. When stocks fall dramatically, wholesalers become anxious and bid more money for product. This in turn raises the overall price of retail gasoline.

Another reason for significant price changes is the change in the cost or supply of crude oil. The most recent gasoline price increases are due in part to OPEC crude oil production cuts in 1999. International conflict has also been a factor in years past such as the Persian Gulf conflict and the Iran/Iraq war.

Seasonality is also another component of the supply/demand issue. Retail gasoline prices tend to rise before and during the summer because people are driving more.

Q: Why are gas prices higher in some states than they are in others?

1) Proximity to Supply: Areas farthest from the Gulf Coast, such as the mid-western and Northern states, tend to have higher gas prices because it costs more to transport and distribute the gas.

2) Taxes.

3) Local Retail Competition: Areas with only a few number of gas stations tend to be more competitive that areas that have a large number of stations. Location has a lot to do with competition. Consumers in remote locations may end up paying a higher price for gas rather than driving to a distant, but lower-priced, gas station. Western New York – because of the presence of independents such as NOCO Express – tends to have cheaper gasoline prices because of local competition.

4) Reformulated Gasoline: As mentioned previously, some areas of the country are required to use the special reformulated gasolines to reduce carbon monoxide and smog. This adds 3 to 5 cents a gallon.