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Gas prices here near top; No. 2 rank in state is tied to lack of competition

Gas prices have been falling across the nation during the past month, as oil prices have dropped on fears of a slowing global economy.

Prices are falling in the Buffalo Niagara region, too, but they remain stubbornly higher than elsewhere in the state.

The national average is $3.41 per gallon, and the outlook looks even better, with some experts predicting prices will drop to $3 before the end of the year.

But Monday, the average price for a gallon of gas in the Buffalo Niagara region was nearly $3.67, ranking it second highest in the state behind only New York City, according to AAA's Daily Fuel Gauge Report. Rochester ($3.596), Syracuse ($3.538), Binghamton ($3.572), and Albany ($3.557) all had prices at least 7 cents less per gallon on Monday.

There are numerous theories why Buffalo's gas prices are consistently higher than they are in other New York cities. Some believe that the lack of competition in the area, where a few companies own numerous stations, allows owners to keep prices high instead of trying to beat competitors' prices.

[JUMP] The Federal Trade Commission launched a probe into local gas prices a year ago to investigate possible anticompetitive and manipulative practices in the region. The results were made public in October, and no illegal activity was found, according to Steve Pacer, public affairs specialist for AAA Western and Central New York.

Michael Newman, executive vice president of Noco Energy Corps., blames the high Buffalo gas prices on the city's location. Buffalo is at the end of the New York pipeline, which he said allows cities like Syracuse and Binghamton to get gasoline at more reasonable prices.

The key for Buffalo gas stations, Newman said, is to open up the Canadian market to supply the area.

"We have a constrained supply here," Newman said. "By the time it gets to Buffalo, the prices are at their highest."

Newman said that if more supply points become a part of the equation, Buffalo motorists will start seeing lower prices at the pump.

Greg Kurk, owner of Kurk Fuel Co., deals mostly in municipal sales but can remember a time when Buffalo had a more competitive gas market.

"There's a high lack of competition," Kurk said.

"If you notice, there are very few independent stations like there were years ago. They would cause price wars. I'm not in the retail end of it, but the lack of competition is causing the problem."

Drivers notice the higher local prices.

"It's really frustrating. I travel a lot, and I notice Buffalo is higher than everywhere else I go," said Kristina Torres of Amherst. "And the prices stay higher longer."

Steve Pacer, public affairs specialist for AAA here, said that the AAA doesn't have all the answers on the issue. AAA of Western and Central New York works with the Oil Price Information Service to gather data to explain the fluctuation among cities.

The two organizations both think that the problem is a lack of competition among retailers. Buffalo has only 21 gas suppliers compared with 25 or more in Rochester and Syracuse.

"[Gas stations] get their supply, and they price it," Pacer said. "We have to take the word of the authorities (like the FTC)" that everything is on the up and up.

Gabriel Atallah, owner of a Mobil station at Millersport Highway and Sheridan Drive in Amherst, was selling gas for $3.74 per gallon Monday, according to buffalogasprices.com.

That was the sixth highest price in WNY. Atallah attributes the high cost to high sales taxes and the quality of gas at his location.

"We pay more in tax," Atallah said. "Everyone has its own price. Mobil is good gas. We pay more to push a good gas. We pay more for this gas."

Motorists received more good news on Monday when U.S. crude oil dropped $1.52 to $78.23 per gallon. Pacer said that analysts are predicting the price of gasoline will continue dropping for the remainder of 2012.

email:?mparrino@buffnews.com