Gas costs 30 cents less in Florence. Bay Area residents are demanding to know why.

Southwestern Oregon Community College business and economics professor Bruce Locker, for one, is irate.

Locker knew gas cost more in Coos County than elsewhere around the state. He didn’t realize how large the disparity was until last week when he drove up to Florence to get some work done on his car. The sight of unleaded gas selling for slightly more than $3.50 struck a chord with Locker.

“I just was appalled,” he said. “There is no logical economic reason why gas should cost nearly 40 cents more than in Florence. Or if there is, I have yet to see one.”

The one rationale Locker could think of was that there are very few local distributors. As a result, they don’t face the competition found in larger communities.

“I don’t know what the justification is for it other than they have control,” he said.

A few distributors and gas station owners tell a different story.

It’s war in Florence, said Scott Bassett, president of Bassett-Hyland Energy Company in Coos Bay. Safeway and Fred Meyer want to sell every drop of gas in town and they keep their prices low to do it, he said.

He said the pricing in Florence is influencing the price in Reedsport, where his company delivers gas to one station. The stations there don’t want their customers driving 20 miles north to buy from Florence stations, he said.

“When you get marketing like that it affects a much larger area,” Bassett said.

Rick Westerberg, owner of the Reedsport Shell station said, on the other hand, he doesn’t take what is happening in Florence seriously. 

“My prices are based on what I pay for the gas, plus overhead,” he said. “There’s very little profit. I add 14 cents a gallon to cover costs and then add what keeps me competitive to that.”

Bud Miles, the co-owner of Miles Oil Company and the Texaco and 76 stations in Florence said the price competition in town is putting the squeeze on his business.

“I’ve been in business here since 1958, selling gas,” Miles said. “We’ve had tough situations, but nothing like this.”

He said the pricing situation has been going on for almost two years.

“It seems like forever,” he said. “No end to it in sight.”

John Truax, the owner of stations in Coquille and the Willamette Valley, agrees the situation in Florence is epic.

“It’s a bloodbath,” he said. “They are kidding you if they say they are making any money. That’s a very competitive environment.”

He said he is aware of a couple gas stations that are up for sale because of the competition created by the price war between Fred Meyer, Safeway and Ron’s Oil stations.

“There’s a lot of pressure on gas stations today, because they’re the ones that have to deal with the public, not the oil companies,” Westenberg said. “It’s a very tough business right now.”

The Oregon Department of Justice looked into the Florence situation in early September. The best guess of spokeswoman Jan Margosian, and a DOJ investigator after a quick look, was the Safeway brought more competition and lower prices to town.

Some people contended North Bend-Coos Bay stations are fixing prices.

There is no proof of that. A Department of Justice report released in the summer of 2006 found no evidence of price gouging (see related story).

But that was then. And the conclusion doesn’t sit well with Locker.

“As a community, I can’t imagine nothing is being done about this.”

Bassett and Truax were the only Coos Bay-area distributors who would comment for this story. Both said Coos Bay’s coastal location and summer tourist season have an effect on prices.

In the non-tourist season, stations may charge a little more to make it through the lean months. Stations keep an eye on each other, too. One station can’t be caught with its prices down — or up — without others following suit.

The cost of trucking the gasoline to coastal communities plays into price, Bassett said. His company hauls gasoline from a Eugene terminal.

AAA Oregon/Idaho Communications Director Marie Dodds said stations off the Interstate 5 corridor generally have higher delivery costs, she said.

Truax had a stronger opinion.

In the Coos Bay market, the price of gas is dictated by Safeway and Ron’s Oil, he said.

“We try to stay close to what’s going on in Coos Bay,” Truax said.

He can remember times when the price of gas was higher in Eugene than Coos Bay.

“It goes up and down,” he said. “I anticipate prices will drift down in the next few months.”

Calls to Carson-Davis Oil in Coos Bay, on Wednesday, Thursday and Friday were not returned. Calls to Goddard Energy in Bandon on Wednesday and Thursday and one to  Ron’s Oil Co. in Coquille Thursday were not returned before press time.

— Reedsport Staff Writer Jack Carrerow contributed to this story.