Gas prices inching up as summer approaches
By Susan Chambers, Staff Writer
Saturday, March 06, 2004 |
South Coast drivers can relish the fact that gasoline prices here are now some of the lowest on the coast, despite having risen between 5 and 7 cents a gallon over the past two weeks.
And we're in for more of the same as gas prices inch up as summer approaches.
"This year is pretty much like last year," John Felmy, chief economist for the American Petroleum Institute, said Friday during a round-table discussion about Oregon gas prices.
Felmy said a combination of things are keeping retail prices up.
Coming off a cold winter, an improving economy, anxiety associated with Iraq, crude oil production problems in Venezuela and turmoil in Nigeria are nearly identical to conditions last year at the beginning of March.
The price of crude oil, too - the biggest factor in the price of gas - is near March 2003 levels. Crude prices peaked at $37.83 a gallon last year in March, Felmy said. As of Friday, crude was trading at $37.45 a gallon.
However, he said, the direct relationship between crude oil prices and the retail price doesn't always work for the West Coast region. California's requirements for a special formulation of gasoline crimp supplies coming to Oregon.
Though Oregon gets most of its gasoline from Washington refineries that depend on Alaska crude oil, the price for which also has risen substantially, California refineries pump a small portion of gasoline north as well.
Regulations require California to run distinctly different fuels during the summer months than the winter months - very different fuels than other summertime, cleaner-burning formulations used by surrounding states. California's gasoline cannot be mixed with formulations going to surrounding regions. The situation is further complicated because the regional terminals have incremental switch-over dates: Southern California must change on March 1; central California on April 1; and northern California on May 1.
Stations and terminals must draw down existing supplies of winter-grade fuels before summer-grade fuels are added and the timing can be tricky.
"It's a very tight switch-over period," Felmy said. "You cannot put summer gasoline in cars too soon in the season because they don't run as well."
The situation could be easier if more refineries or storage were available but the petroleum industry is operating at its maximum capacity.
Any hiccup on the supply line, at either the regional, national or international level, leads to problems.
But even with recent increases, Oregon's statewide average prices remain lower than other western states. California, Nevada and Hawaii have reported statewide averages of more than $2 a gallon, according to the American Automobile Association in Oregon.
"The most dominant force is the high cost of crude oil," AAA Oregon Public Affairs Director Elliott Eki said in a press release.
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