A View from Here

Bill's Sisson's weekly Trade Only blog

More fuel for thought

Wow!

Thank you for such an enlightening discussion on gas prices.

To answer Tom Duncan’s question, the prices I quoted were prices from local gas stations.

I know fuel prices at the docks are higher than prices at the local gas pump. It has been bantered around that the dock prices are about 30 percent higher. Don’t know if that’s true. Perhaps you can provide the answer to that.

Also, what would happen if marinas within a certain area got together and bought their fuel as one entity? They’d buy in volume and could get a discount. At least that’s how it works in theory.

Bob Taylor wrote and said he pays a ‘member’ price. Bob, how does that work? Perhaps that would help other marinas and, ultimately, the boaters.

Also, do marinas in the same region have the same price discrepancies as the local gas stations located within blocks of each other?  

Finally, what about the road taxes.

When boaters pay for gas at the docks, where does that money go?

– Lois Caliri
Editor 

Comments

7 comments on “More fuel for thought

  1. Ron Stone

    Federal tax on gasoline purchased for use in pleasure boats is earmarked for financial assistance to the states in providing boating and sport fishing enhancement programs. Most states similarly earmark state marine fuel tax as a way of matching the federal grants. This datres back to the Wallop-Breaux Act enacted by Congress in 1984. It’s popularly referred to as the “user pay” principle; boaters get to pay their own way for government facilities and services.

  2. Dennis Wills

    Lois, In Missouri, all road and federal taxes are passed on to the boater. In MO there is a way to apply for a refund of State taxes. Gas prices vary, depending on what the seller is trying to accomplish. The most competitive are independent gas docks that sometimes lease space from a shore facility. Frequently they sell snacks, inflatable water toys and perhaps some rentals. Most expensive are the big resort marinas that cater mostly to their slip and lodging customers and who pass a discount to them, but even with that they are still higher.
    I think the cost of gas will be a huge factor in how much boating is done this summer. Most people have to drive to the water, and with boats burning 10-30 gallons per hour and more, and most likely $4 per gallon this summer, the simple math means $40 to $120 per hour just for fuel.
    Hope this helps

  3. Chris DiMillo

    As a fuel dock operator, I have been continually trying to understand the fuel market. As far as I see it, wholesale fuel is sold based on a local rack rate plus a delivery fee. The delivery fee can be negotiated by a few pennies per gallon depending the supplier, but the rack rate is what every supplier is paying for the product, and is published daily. Large volumes can reduce the delivery fee but not significantly in relation to current prices.

    In my best estimation, the only way to offer better fuel prices is to sign contracts to purchase fuel in advance, and I believe it can only be done for diesel. You can sign up for so many gallons at a negotiated rate, and you are forced to buy that fuel even if the price goes down. It seems as if it is a no brainer as prices have steadily climbed, but at these high prices, there is always the risk that you get stuck with expensive fuel. My supplier has advised me that I should continue to just pay the “rack plus price” and add my normal margin.

    It does not explain why I get price quotes from two wholesale suppliers every summer day, and I find that “street” gas stations are offering gasoline for retail prices in the same neighborhood as my wholesale pricing. I even get wholesale quotes from the same company that owns the retail street stations.

    I am missing something but I have yet to figure it out.

    In the years of $1.50 gas and $1.00 diesel, we used to mark up a fixed amount per gallon regardless of the price. But now as prices are skyrocketing, so are the expenses associated with fuel sales like credit card discount fees, insurance costs, and sales tax (paid by me at the time of purchase from the wholesale vs a typical retail sales tax)–all of which are figured as a percentage of sales. Granted, as the pump price goes up, our margin dollars do go up, but so does the percentage of the expenses for each gallon sold. Furthermore, we are finding an obvious and inverse relationship of the price at the pump and the number of gallons we sell.

    We try and round down to keep prices under certain psychological barriers, but in order to stay in business, fuel docks have to maintain margins and not go cheap for the good of the industry. We are making a reasonable profit, but I am certainly not getting rich on profit from gas and fuel sales.

    In our state, $.45/gallon (.27 state, .18 federal) road tax is still included in gasoline, but we sell low sulfur diesel which only includes a 5% sales tax, which at todays rate is upwards of $.20/gallon, there is no more road tax.

    My last point is that we have a busy fuel dock in the summer season in Maine. Our fuel sales are as strong as anyone in the state, but we are still considered smaller than the small gas station. Gas stations enjoy volumes 10 – 100 times the volume that we hope to maintain.

  4. Gordy McKelvey

    Tennessee has a $0.28 per gallon road tax on all fuel except for “off road” fuel, primarily diesel. Off road fuel has a yellow dye added that is required by state law. Marina fuel is dyed yellow. Hence it is sold to the marinas as off road fuel, but the road tax is still passed on to the boaters who buy at marinas. This fuel tax is directed into the “General Fund” of the state treasurery and from there is lost forever in some black hole. I have heard that forms exist that can be filled out and turned in to the Tennessee Department of Revenue for a refund. Yeah, right! Of course no one knows where to obtain these forms.

    Several states including Florida have dropped the road tax on marina fuel. I doubt Tennessee will ever drop that tax. Tennessee does not have an income tax and the primary source of income is based on sales tax revenues, so boaters must continue to pay to play.

  5. Bob Taylor

    The Marina at Marina Shores developed the program for “member pricing” to help market their marina. Marina Shores is a full service marina with dry storage, 180+ wet slips, two restaurants, three new boat dealers and two brokers, canvas shop and a custom rod shop. As a member you are entitle to pay member pricing. Currently non-member pricing is about equal to the other outlets in the inlet and member price for gas is 20 to 40 cents lower and diesel is 30 to 40 cents lower.

    The marina made the decision to discount their profits on gas and diesel as a marketing tool to bring in new members and associate members. Last season it was reported that the dry storage was just about full, outside dry storage was full with a waiting list and the wet slips were at 90% full.

    As far as road taxes, in Virginia any gas purchased for a boat is exempt from the road tax. The state has forms for filing your receipts for a rebate.

  6. Doug Nelson

    Ask Exxon, Chevron, Mobil, etc. These CEOs have all been interviewed on morning TV shows and their final answer always comes down to, “our job is to protect our shareholders”. If their cost goes up a dime, you can bet it will cost you a quarter! It’s embarrasing for a U.S. citizen to imagine this happening to everyone in this country who drives, boats, flies or receives anything via truck, and of course their only required legal answer is “if you don’t like it, join us”. (but I’m still proud to be a citizen)

  7. John Wisse

    In Ohio, 7/8 of 1 percent of the state’s motor fuel taxes go to the Ohio Department of Natural Resources to support boating programs. It is the largest source of revenue for the state’s watercraft agency. On a related note, the real impact of costs associated with boating activities and their impact needs to really be measured in terms of engine hours of operation, also known as the amount of time boat engines are operational while boat are under way on the water. I’m not sure anyone has those types of statistics.

Leave a Reply

Your email address will not be published. Required fields are marked *

Comments are moderated and generally will be posted if they are on-topic and not abusive. For more information, please see our Comments Policy.