Kentucky City Battles High Gas Prices With Public Fuel Center

The city's officials voted to manage its own gas station for the public.

ByABC News
July 23, 2014, 1:48 PM

— -- City officials in Somerset, Kentucky, about 70 miles south of Lexington, have responded to "big business" by opening a taxpayer-supported gas station for the public with the stated purpose of driving down pump prices.

The Somerset Fuel Center opened last weekend with 10 nozzles and a sale price of $3.36 a gallon for regular gas. The price is only a few cents cheaper than nearby private gas stations, but competitors have reportedly lowered their prices in response.

"We are thrilled to hopefully have lower gas prices," Beverly Perry, 62, a resident of Somerset, told ABC News.

Perry explained that the city is a tourism magnet from about May through Labor Day because of nearby Lake Cumberland.

"People take advantage of that and we are penalized constantly," she said, referring to increased tourism demand that drives up fuel prices.

Mayor Eddie Girdler told ABC affiliate WBKO that gas prices traditionally increase 20 to 30 cents on the weekend in his city.

"If government doesn't do it to protect the public, then who does it?" Girlder told WBKO. "It's the role of government to protect us from big business."

Girdler could not be reached for further comment.

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Brian Clark, executive director of the Kentucky Petroleum Marketers Association, told ABC News his organization and the Petroleum Marketers Association of America are watching the “unprecedented” city fueling center very closely.

“The city will be competing directly with small businesses directly in the community, which raises many questions, not the least of which is: why is this a good idea?” Clark said. “It’s scary for us who depend on local businesses for their jobs, especially because the government says it intends to interfere with the free market.”

The national average for regular gas is $3.59 a gallon, down 4 cents from a week ago and 8 cents from a year ago, according to the Energy Department’s weekly price report on Monday.

Clark called the gas business “a highly competitive industry,” that now has owners and residents paying taxes as businesses and contributing to the local economy while competing with this new service.

“It clearly changes the dynamics in that area. Our association wants to compete on a level playing field,” he said.

Girdler told the Washington Post, “We don’t care if we don’t sell a drop of gasoline. Our objective is to lower the price.”

The city's investment included $200,000 to buy a fuel storage facility and less than $75,000 to convert it into a retail business, Girdler told the Post.

While some Somerset drivers applauded the move to lower gas prices, others criticized it as overreaching the government's authority.

“They’ve used the taxpayer money that I have paid them over these years to do this, to be against us,” Duane Adams, a convenience store owner in Somerset, told the Post. “I do not see how they can’t see that as socialism.”