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EL DORADO, Kan. -- Badwey Oil Co., a wholesale supplier and distributor of gasoline and petroleum products, was recently issued state tax liens totaling more than $1 million in unpaid fuel taxes.
The two liens filed by the state equal $686,414 and $318,734 for motor vehicle fuel and special fuel taxes, according to public record information issued in September, according to the Wichita Business Journal.
Tom Palace, executive director of the Petroleum Marketers & Convenience Store Association of Kansas, says he hadn't heard about any problems facing Badwey Oil. The company, he said, is not a member of the association.
But while Palace says Badwey's tax issues are the exception to the rule in Kansas, he admits that the industry is difficult these days because of rising tax costs and competitiveness with border states. "Times are pretty tough right now," he said.
Badwey isn't the only company in the fuel industry to have money problems recently. In September, Belle Plaine, Kan.-based Sav-A-Trip Inc., which operates more than 20 convenience stores in Kansas, filed for Chapter 11 bankruptcy. Its bankruptcy involved five other entities in Kansas and Oklahoma. The company has since closed all locations in Oklahoma and two in Kansas.
Part of the problem, Palace said, is the cost of gasoline and diesel fuel, which rose this year and is significantly higher than surrounding states. On July 1, the Kansas tax per gallon for diesel fuel and gasoline was raised one penny to 26 cents and 24 cents, respectively, says Pat Williams, customer representative for the Kansas Department of Revenue. That's almost 10 cents more than in Missouri and Oklahoma.
"We're not competitive," Palace says. "It hurts our people on the borders, and it hurts every truck stop in the state of Kansas."
Consumers don't realize how much of the cost of the gas they buy is from taxes, says Neal Sweeney, president of convenience store chain and fuel dealer Retail Fuels Marketing, based in Tulsa. Those taxes, combined with increasing fuel costs, make operating costs higher for the entire industry.
Some of that cost is passed on to consumers, but sometimes that's not enough, Sweeney said. "For wholesalers dealing in millions of gallons, it may not be something added into your capital structure," he says. "It's just a matter of math."