Homer Alaska - News -

But look quick, because Thurmond and other service station owners received word fuel prices are taking another jump.

"As you speak, as you're doing this interview, fuel just went up another 10 cents," Thurmond said.

Shelly Erickson, owner and operator of Home Run Oil Company since 2000, got the same notice.

"In the last two weeks it's gone up 20 cents," Erickson said Tuesday. "It went up 10 cents last Friday and it just went up another 10 cents last night. É We've seen times where it jumped up, but this is crazy."

The national average for a gallon of regular gas was $3.617 as of Wednesday. That's one cent more than Tuesday, according to data provided by AAA. Just a month ago the average cost for a gallon of regular gasoline was $3.287. A year ago it was $2.965.

What's pushing the price?

Demand inside the United States is partly to blame, according to AAA.

"In 1970, Americans were estimated to travel 1.1 trillion miles annually by motor vehicle. Today, Americans are estimated to log over 3 trillion miles annually in their cars and trucks," an AAA press release read earlier this month. "These statistics provide a clear answer that demand is increasing the price of oil and why pump prices have reached the most unimagined level of $3.50 per gallon."

The rest of the answer lies in a growing demand outside the United States, in other countries that "have begun to grow and expand and their appetite for an energy-intensive standard of living seems to have outgrown America's ability to set the pace of economic expansion," said AAA spokesperson Denise Harris.

Statistics from the Energy Information Administration indicate the following breakdown for a gallon of gas:

• 13 percent taxes;

• 8 percent distribution and marketing;

• 8 percent refining;

• 72 percent crude oil.

"World crude oil prices are at record highs due mainly to high worldwide oil demand relative to supply," stated data provided by EIA. "Other factors contributing to higher prices include political events and conflicts in some major oil producing regions, as well as other factors such as the declining value of the U.S. dollar."

Erickson said refinery costs, freight, and borough and city sales tax figure into the equation. As of January 1, 2008, Kenai Peninsula Borough sales tax was 3 percent, but city rates vary from city to city. Homer's year-round rate and Seldovia's summer rate are the highest, at 4.5 percent. Seldovia's winter rate is the lowest -- 2 percent -- while Seward is a year-round 4 percent. Kenai and Soldotna are 3 percent.

Homer City Manager Walt Wrede said the city also is feeling the bite of rising fuel costs.

"It's killing us -- heating fuel, gasoline for our fleet. É Every time we get a bill, it's sort of eye-popping," Wrede said.

During fiscal year 2007, the city took in $150,000 more in sales tax than was projected in the budget. However, how much of that is due to increased fuel costs is unknown, Wrede said.

"Total gross sales went down last year, but taxable sales went up, so we're having kind of an internal debate about what that means," he said. "Sales related to construction and a few other things, like tourism, went down, but sales that were taxable went up. So it means smaller purchases seem to be becoming more important."

Federal and state excise tax is another factor of the per-gallon price of fuel. That tax is a set amount, rather than a percentage. On Tuesday, it was $.264 on every gallon of fuel, according to Erickson.

"Then you have the cost of fuel and whatever your margin or cost of doing business is," she said.

While credit cards may be convenient for customers, associated fees only add to the cost of doing business.

"The higher the fees, the more that comes out of the margin. We're trying to eliminate credit card fees and pass the savings on," Erickson said, explaining the five-cent savings Home Run offers cash-paying customers.

Home Run purchases its fuel from Tesoro.

"We're trying to get it as cheaply as possible," Erickson said. "The sad part is that people think it's us making the money, but it's not. É People want to take it out on us, like we're the bad people, but we're having to pay those increases with every load of fuel."

Thurmond, who opened Thurmond's Auto as a gas station in August 1993 (prior to that, it was an auto repair shop), purchases fuel from Alaska Oil Sales in Soldotna.

"I've been with them from the beginning," she said.

Longevity is part of Thurmond's business plan, as well as her lifestyle.

"This is where I've lived for 25 years. I want to see my community continue to grow and I'm just doing my share to see it happen," she said.

Of the rising price of fuel, Thurmond, who drives a Ford Expedition, said, "I'm feeling it too."