May 7, 2004
Max Jarman
The Arizona Republic

Phoenix-area gas prices jumped at least 10 cents a gallon in the space of a day or two at many stations, and AAA officials are predicting more spikes this month and scattered shortages in the summer.

The sudden rise in prices, spurred by a surge in wholesale prices since Friday, has consumers and businesses scrambling to avoid a hit to their budgets or bottom lines.

The price leaps led to a few small scenes of hurried bargain-hunting, as drivers converged on stations that hadn't yet raised prices for unleaded regular by 5 cents or more.

At the Exxon station at 701 E. Glendale Ave. in Phoenix, for example, managers raised the unleaded price Thursday morning to $2.03 from $1.99. But the station bumped it up to $2.07 around midday to keep from running out.

"We were selling so much gas we wanted to slow down the demand," said station manager Judy Vere, adding that the station wasn't due for a shipment for several days. Sales were still brisk because many competitors were selling gas for $2.15 or higher, she said.

The prospect of spot shortages during the peak-travel summer months conjured up memories of last summer's gasoline crisis, when a major pipeline from Tucson to Phoenix ruptured and was shut down, leading to long lines at the pumps.

No one is predicting anything close to that scenario. But relentless demand could outpace supplies, driving up prices more and causing some stations to run out, AAA Arizona spokesman David Cowley said.

He said he thinks there could be more big jumps next week and still more around Memorial Day. He sees prices inching up throughout the summer, reaching $2.25 by Labor Day. Others envision prices approaching $3.

Cowley said refineries are now operating at capacity, with a 2 to 4 percent increase in demand forecast for this summer.

The higher prices are taking a toll on local businesses that transport goods and customers.

M.D. Pruitt's Home Furnishing in Phoenix has cut down on its deliveries to offset higher gas prices and said it may have to raise its delivery charge. The store charges $39 now and has considered raising it to $50.

Southwest Ambulance Service, which logs more than 4 million miles a year in Maricopa and Pinal counties, isn't as fortunate. Its rates are set by the state, so it can't arbitrarily charge more to cover higher fuel costs.

"Right now, we're taking the hit," company spokesman Josh Weiss said.

The company's vehicles run on diesel, which helps somewhat. But diesel prices have soared, as well. Since February, they've jumped more than 41 cents per gallon, or 24 percent.

AAA Arizona, which tracks the state's fuel prices, said the average price of unleaded regular was $2.05 per gallon in the Phoenix area Thursday, up 3 cents from the day before. Cowley called the increase significant, saying prices went up much more at many stations.

He attributed the sudden jumps at the pump to stations that may have delayed raising prices until they were no longer able to absorb the wholesale increases. Long-term, strong demand and record crude-oil prices are expected to keep prices high, he said.

Since Friday, the wholesale price of branded unleaded regular gas sold by Phoenix stations that are affiliated with a refinery has increased 11 cents a gallon, to $2.03. The price paid by non-branded independent stations jumped 12 cents, to $2.13.

Luz Rubio, executive director of the Southwest Automotive Trades Alliance, a trade association for independent gas station owners, predicted wholesale prices will continue to rise.

"They told people that prices would go up, and they did," she said.

Rubio attributed the sudden rise to a recent $2-a-barrel jump in crude-oil prices. Traditionally, a $1 jump in the price of crude translates to a 2.4-cent increase at the pump.

"It used to take a couple of weeks for a rise in crude oil to be felt at the pump," Rubio said. "Today, it hits the next day." She could think of no other reason for the increase.

"There has been nothing to affect supplies, and demand has remained about the same," she said.

It's too early to tell if the higher prices will chase drivers into carpools or city buses, officials said.

"In the spring, we see an increase of ridership anyway," said Marie Chappel, spokeswoman for Valley Metro. "When we will really know if gas prices have an impact on us will be in June, when ridership typically drops off."

http://www.azcentral.com/news/articles/0507gasprices07.html