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FAIRBANKS -- There are many reasons why gasoline prices in Fairbanks —which are creeping down toward $3 a gallon — remain 80 to 90 cents a gallon higher than the Lower 48 average.

One of the reasons can be found in the recent troubled performance of Tesoro, the company that dominates the gasoline market in Alaska and has six refineries Outside, where prices are lower.

A year ago, Tesoro stock was valued in the $60 range. Today it is in the $10 range. At one point last month, the stock was below $8.

Flint Hills, with a refinery in North Pole, provides about 15 percent of the gasoline in Alaska, while Tesoro provides the majority of fuel that goes into gas tanks. Flint Hills is a privately held company. Tesoro is publicly traded, so more details about its operations are available to the public.

In general terms, the gasoline market remains more competitive Outside than it is in Alaska, so, with falling crude oil prices, the market pressure to lower prices is more intense Outside than it is in Alaska.

According to Reuters, gas is $1.95 in Cleveland, $1.98 in Houston and $2.37 in New York, where the state gas tax is about 33 cents. Alaska suspended its state gas tax this past summer.

There are three states with average gas prices below $2, CNN reported — Missouri, Oklahoma and Ohio — while the national average is $2.24, the lowest in 21 months.

When wholesale crude oil spiked to record levels this year, the price at the pump shot up, but retail prices didn’t rise enough to keep the refining business profitable, the Petroleum Economist of London reported in May.

The refining companies had record results before the steep climb in oil prices, but 2008 has been a bad year. It has been particularly tough on companies like Tesoro that don’t explore or produce oil.

But that is starting to change. Oil prices have dropped by more than $75 per barrel since the summer.

“Now that oil prices are dropping, wholesale prices are falling faster than retail prices, widening the profits of those in the business of selling gasoline,” the Wall Street Journal said Oct. 29.

Tesoro said its third-quarter earnings rose five-fold because of higher profit margins. It doesn’t reveal what the profit margins are in Alaska, compared to the other regions where it operates.

The Tesoro refinery in Kenai represents more than 10 percent of the company’s refining capacity. It has other refineries in Anacortes, Wash., as well as in Mandan, N.D., Salt Lake City, Los Angeles, Martinez, Calif., and Kapolei, Hawaii.

In Alaska, Tesoro has 31 company-owned stores and there are 60 independently owned Tesoro Alaska stations.

The company does not report its Alaska results independently. It lists combined figures for the Anacortes refinery and the Kenai refinery. The Anacortes refinery has a capacity of 115,000 barrels a day, while the Kenai operation handles up to 72,000 barrels per day.

Tesoro reported a gross refining margin per barrel of $13.76 in the Pacific Northwest in the most recent quarter, compared to a company average of $16.69.

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WREATH: The Eclipse ‘93 Comp Soccer Team is selling fresh wreaths. The selection includes 22-inch wreaths, door swags and candle ring centerpieces with candles, all featuring aromatic Pacific Northwest noble fir. The cost is $35 and all proceeds help the team.

Orders will be taken until Wednesday by calling 388-4075 or 388-3182.

Deliveries will be made in December.

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TWO WAY: Cushman Street opens for two-way traffic from 10th Avenue to Gaffney Road Thursday. The city plans to remove the barriers, so be prepared for a serious traffic hazard.

If you have a column suggestion or a comment, contact me at cole@newsminer.com or 459-7530.