Regional
4:51 pm
Thu July 24, 2014

Somerset’s New Retail Gasoline Venture: Good Idea or Bad? It Depends On Whom You Ask

Late Wednesday morning Bob Thomas was pontificating about the state of the local economy and congress as he was filling up his green Toyota pickup truck at the city owned fuel station.  The facility is bare-bones with no snacks, no sodas and no lottery tickets.  It’s not on a main thoroughfare, but set back a bit from Highway 27.

It has been open less than a week, but has generated plenty of controversy and nationwide attention. It’s believed Somerset is the first municipality to sell gasoline directly to customers.

“It should have been this way years ago: fair,” said Thomas.  “You get me? If the people at the refinery is making money on the gas and the city is going to make a little money. I don’t mind you making you a  living whenever you come to work for me and pay you a fair wage.  But I don’t want to send you to the Bahamas on a 30 day vacation, though.”

It was complaints similar to Thomas’ that led Somerset’s City Council to broach the topic of selling its own gasoline.  The city had already been selling compressed natural gas for two years. In fact, much of the infrastructure the city needed to begin selling gasoline was already in place to service Somerset’s fleet vehicles.

“Some communities operate electric power plants. Some communities do cable systems.  We’re doing nothing new,” said Mayor Eddie Girdler. “The only thing different that we’re doing  is that – you’re bucking against big oil [and] big international companies who has [sic] a monopoly both in Congress and in serving that product to the American people.”

Mayor Girdler says over the last 25 years, gas prices in the area have been traditionally 25-30 cents higher than other areas in southern and eastern Kentucky.  He says it was especially painful for tourists visiting nearby Lake Cumberland, but also residents of Somerset, whose median income is not as high as in other parts of the state.

But opponents like State Sen. Chris Girdler say gas prices are high everywhere. He says the 25-30 cent figure is purely anecdotal.

“You know, that was always a common perception in this city.  But it goes back to the old saying ‘gas is always cheaper somewhere else’,” said Sen. Girdler. “For many years, I traveled all over Kentucky and there were many times where I pass through a city and gas was a little more and there were many times when I would pass through a city and gas was a little less.”

He points to numbers from gasbuddy.com which show Somerset’s average retail gas price at $3.51 over the last 3 ½ years. That’s the same as Lexington and just five cents higher than Monticello.  The only city with a significantly lower average during that time was Corbin, Kentucky.

State Sen. Girdler not only works in the General Assembly, but is also a vice president at a local bank in Somerset. He says paying high prices for gasoline is painful for him too as he works to provide for his wife and children. But when it comes to Somerset’s entry into the retail gasoline business, Girdler isn’t afraid to throw out the term “socialism.”
 

"The government going into the private sector industry is not the answer. It never has been and it never will be. It's nothing but a socialist movement toward government trying to solve everyone's problem." - State Sen. Chris Girdler

“I feel the pain at the pump and I want lower gas prices as well,” said Sen. Girdler.  “But the government going into the private sector industry is not the answer. It never has been and it never will be.  It’s nothing but a socialist movement toward government trying to solve everyone’s problem.  Government is not the answer, it’s the problem.”

Somerset city attorney Carrie Wiese says the situation  would be different if they city were demanding every resident fill up at the city fuel station, or mandating every gas station adhere to a fixed price per gallon. She argues that in Kentucky, “municipalities are corporations and have the right to enter into business.”

“We’re paying the same taxes and fees and we’re taking on the same costs as any another private corporation that would want to open a gas station and go into business,” said Wiese. “We’re not being treated any differently; we’re not subsidizing the price. We’re not getting any benefits just because we’re a government agency.”

Distant Relation, Distant on Gasoline Sales

State Senator Girdler’s office at the bank is just a few blocks walk from City Hall. He says he and the mayor are distant relatives.  That adjective can also be used to describe the gulf between the two men when it comes to the issue of Somerset selling retail gasoline to customers.

The city purchases the gasoline it sells to customers from a local refinery. It bought the land, the 10 canopies and storage tanks at the fuel center several years ago.  According to the mayor, Somerset has invested  $300,000 in the fuel center.  The city spent another $75,000 to outfit the facility with the proper equipment to handle credit cards from customers.

"We had everything in place and City Council actually had three votes to the public. Again, not a single citizen, not a single politician came to the City Council and objected." - Somerset Mayor Eddie Girdler

Mayor Girdler takes a somewhat nuanced approach to justifying the public investment made in the equipment, parsing tax dollars from fees collected from city services.

“Our property taxes only accounts for five percent of our budget, so we don’t rely upon property taxes. There are no tax dollars of any nature going into this project. A lot of people are saying ‘what about tax dollars?’ Well, there are no tax dollars. Somerset operates off of services.”

But that raises the question: is there an appreciable difference between money collected from taxes and money collected from city service fees?  To some, public dollars are public dollars and that doesn’t sit well with Sen. Girdler.

“To say when the city of Somerset is spending hundreds of thousands of dollars to establish themselves into the gasoline business that that’s not taxpayer money being used – that is completely absurd and false,” said Sen. Girdler.

But Mayor Girdler argues that some of the money to operate the fuel center comes from the 12 agencies in and around Somerset, including the school district, which purchase compressed natural gas from the city.

"Two Years  of Work, Study [and] Analysis"

Mayor Girdler says City Council has been discussing and planning the retail gas service for two years with virtually no public outcry.

“When we opened last Friday, it was really two years of work, study, analysis,” said Mayor Girdler. “But the biggest thing you’ve got to remember, and to your audience, not a single time did any federal, state or local politician ever come to us and say ‘there are alternatives, there are other ways to do this.  Let’s look at those.’”

He says Somerset residents had had the opportunity to voice opposition at public meetings that were also broadcast on local cable.

“We had everything in place and City Council actually had three votes to the public.  Again, not a single citizen, not a single politician came to the City Council and objected.”

But State Senator Girdler says there was resistance.

 “This is completely a wolf in sheep’s clothing,” said Sen. Girdler. “ It sounds good to the average citizen out there. But I can’t imagine that a city subsidizing a business venture with taxpayer dollars where the consumer – in reality – is paying more for gasoline.  Because, again, it is the taxpayer dollar being used to purchase this equipment, and then they’re the ones paying for it at the pump, so they’re in essence paying twice for this. 

"There was a lot of resistance and a lot of people felt surely our own government would not go into competition against private businesses, but unfortunately, that is exactly what has taken place,” said Sen. Girdler.

Chris Girdler isn’t shy about publicly lambasting the effort to sell gasoline to customers in Somerset.   As for Mayor Eddie Girdler, his harshest criticism is reserved for Washington and international oil companies.

“We’ve been selling to the public for over two years and not a single word from anybody. It’s amazing that you can put an energy form like natural gas into vehicles to sell to the public and your politicians and big business doesn’t get upset.   But the day you sell gasoline? Heaven forbid!  Gasoline to the public? Then all of a sudden it becomes a big issue.”

He says he’s taken a considerable amount of heat as the plan came to fruition.

“Since then, there’s been one local distributor who’s going to spend all sorts of money – open the checkbook so to speak – to get out both myself and the City Council.  So there’s been quite a few threats, both local and nationally, because of the fact that we’re selling gasoline to the public.”

Mayor Girdler says he and City Council are worried not about big oil companies or national politicians, but only about the town’s 11-thousand residents.

“And so, virtually, the City Council decided that they were elected by the people, to serve the people and this was something they were going to do,” said Mayor Girdler.

As Somerset’s gasoline-selling experiment continues, the answers to several questions are likely reveal themselves over the coming months and years: Will the residents of Somerset feel like the investment they’ve made is worth it? What will the ramifications be for the mayor and City Council when voters next head to the polls? And will other cities follow Somerset down this uncertain path?