Gas prices not expected to reach $3 a gallon

Monday, May 7, 2001 | 10:59 a.m.

Local gasoline industry experts says gas is not likely to reach $3 a gallon this summer despite media reports nationwide predicting such a rise.

"You should not be telling readers to get ready for $3 a gallon -- you should be asking why $3 when there is no reason for it other than holding consumers hostage at the pump," Nevada Gasoline Retailers Association President Jack Greco, a longtime oil company critic, said.

"There is no shortage of crude oil on the West Coast. The oil companies know that if they say there is a shortage, there will be a congressional investigation. But when they say prices will rise sharply, they usually get what they want from Congress. This is all orchestrated by the oil companies."

What they want, Greco said, is to explore the Alaska tundra for oil and a relaxation of environmental restrictions for refinery expansion.

Several media stories in recent days have forecast high pump prices during the upcoming summer tourist season.

USA Today reported that Shell and Chevron dealers in California and Chicago say they have been told by regional representatives to get ready for the possibility of $3-a-gallon gasoline this summer.

The Associated Press reported today that President Bush won't stop gasoline prices from rising this summer even if the cost tops $3 per gallon.

Greco said that announcement comes as no surprise "given that a Texas oil man is in the White House. They (oil companies) expect the pendulum to swing the other way and they will get the relaxation in environmental restrictions for refineries that they failed to get during the Clinton administration."

Also, one of Bush's pet projects is Alaskan oil exploration.

Greco is not alone in his assertions that $3 is unlikely.

"Three dollars is very high -- almost impossible," Atle Erlingsson, spokesman for AAA in San Francisco, which regularly studies oil prices and trends, said today.

"For that to happen, you would need the worst-case scenario. Gasoline prices normally rise in the summer after Memorial Day; the only question is how high. But we're not looking as high as $3."

Erlingsson said that sharply rising prices in recent weeks -- about eight cents to a dime -- have leveled off in some places and have even dropped a few pennies in others. That, he said, is not unusual, and the trend should continue.

The Lundberg Survey of 8,000 service stations nationwide reported this week that U.S. gasoline prices, led by jumps at the pump in the Midwest and West, reached an all-time unadjusted high over the past two weeks.

The nation's average price of gas, including all grades and taxes, was $1.76 per gallon on Friday, up 5 percent from April 20, Lundberg said, noting that overall, U.S. gasoline prices increased 8.58 cents over the past two weeks. In the Midwest, the increase was 13 cents, Lundberg said.

Greco, however, said that Las Vegas has not yet reached its all-time high of about $1.85. Unleaded gasoline locally was selling today around $1.75 a gallon, he said.

The $3-a-gallon figure started out as an industry joke, and experts initially scoffed at it, Greco said.

"The oil companies must have figured, why not use it for real? And now the experts are saying it is a possibility," Greco said. "It's like a similar situation with the power company. Consumers will accept increases in rates -- anything but having their power turned off."

The Associated Press

contributed to this report.