Gas Prices at Record Highs

No stopping gas prices

March 5, 2003
By James R. Healey, USA TODAY

Average gasoline prices hit records in six western states and are within a penny of records in five other states across the country as overnight price increases continue to drain motorists' wallets and threaten a nascent economic recovery.

The nationwide average of $1.684 is not far from the record $1.7178.

And diesel fuel, at $1.792, continues setting daily records. Big haulers UPS and FedEx Ground just boosted ground-transportation fuel surcharges to 1.5% from 1.25% because of diesel prices. Crude oil, after dropping Monday, jumped the other way Tuesday, foretelling even pricier fuel.

"The West Coast is a canary in a coal mine for the rest of the country. I would not be surprised to see most people paying $2 to $2.25 for gasoline in April," says Tom Kloza, veteran analyst at Oil Price Information Service (OPIS). "Everything points to all-time highs in every state."

Energy Secretary Spencer Abraham told USA TODAY on Tuesday that there is little the federal government can do about the prices. But he warned retailers, wholesalers and refiners that "we do not wish to see people exploit" fears about war with Iraq and low U.S. fuel supplies by overcharging.

California has the highest statewide average price for a gallon of unleaded regular — a record $2.036, up 2.9 cents overnight, according to data gathered from tens of thousands of gas stations by OPIS and Wright Express and published by motorist organization AAA.

Gas prices reach new highs

States that just set new records for statewide average price of a gallon of unleaded regular:

California $2.036
Nevada $1.895
Oregon $1.861
Washington $1.814
Arizona $1.750
Utah $1.678

Source: AAA, Oil Price Information Service, Wright Express

California's previous record average: $2.022 on May 26, 2001. A year ago, the average was $1.358. San Francisco is highest at $2.188. "My wife made the comment, 'You better fill up today because tomorrow it'll be higher,' " says Barry Rosenfeld of Bakersfield, Calif. He's regional manager for a life insurance company and drives his Jeep Grand Cherokee 25,000 miles a year throughout central California and around Los Angeles. "You have to see the customers regardless of the cost of gas. The bottom line is, the bottom line is less," he says. He fills up every time he finds a discount gas station, even if his Jeep is nearly full.

Three-fourths of Americans expect gas prices to be higher in a month, and half of all Americans think prices will be up six months from now, according to a USA TODAY/CNN/Gallup poll Feb. 17-19.

"It's not comforting if you've just experienced a sharp increase, but it only reflects the (increasing) price of crude oil," says Ron Planting, analyst at the trade group American Petroleum Institute.

Kloza says gasoline prices normally jump on their own as spring driving season approaches. This spring they'll be zooming up from already high levels, he forecasts. "It's Ash Wednesday, and we're going to be asked to give up disposable income for Lent," he says, as high fuel prices rob consumers of money to pay for computers, cars, home improvements and other economy-boosting goods and services.

Normal rules seem not to apply. Louisiana is bumping near its record, even though it's in the heart of oil and pipeline country. Most Northeast states, far from pipelines, are below records. Behind the prices:

* Conversion to ethanol instead of potential pollutant MTBE as an ingredient in summer-season gas. The change is cumbersome, and states such as California rely on distant states for corn-based ethanol. "Not a lot of folks can help them out if they get into trouble" with ethanol supplies, says Joanne Shore, senior analyst at DOE's Energy Information Administration.

* Immediate price information and reaction to it. Higher oil prices today could mean higher gas prices tomorrow, instead of six weeks from now as has been normal in less-volatile times.

Fears and uncertainties pushed oil prices back up Tuesday. U.S. light crude for April delivery rose $1.01 to $36.89 a barrel. In London, Brent crude was 61 cents higher at $33.09.

Contributing: Barbara Hansen

http://www.usatoday.com/money/industries/energy/2003-03-04-gasprices_x.htm