Gasoline prices in valley likely to stay high

Friday, March 21, 2003 | 10:02 a.m.

The price of crude oil has dropped from nearly $40 a barrel to $29 a barrel this week despite the start of war with Iraq, but oil experts say that does not necessarily mean the price at the pump will be going down anytime soon.

And, in Nevada and California, where prices are among the highest in the nation, they could continue to rise further above the $2 plateau as crude oil prices today also are expected to start rising again, oil industry experts say.

"We have a saying in this business that prices rise like a rocket and fall like a feather," said Jenny Mack, spokeswoman for AAA-Nevada in San Francisco.

The company known primarily for emergency road assistance and other motorist services also tracks for consumers the nationwide prices for gasoline.

"While crude prices have fallen it takes quite a while for it to trickle down to the retail level," she said. "We certainly are getting a lot of calls and e-mails from people exasperated that prices have been high for so long."

The average price for regular unleaded gasoline in Nevada today is $2.03 per gallon, compared to $1.42 per gallon at this time last year. The national average is $1.72 for regular unleaded, up from $1.30 a gallon at this time last year, AAA said.

The same is true for all other fuel products as mid-grade is selling for $2.14 in Nevada ($1.49 this time last year), premium is at $2.22 ($1.55 last year) and diesel fuel is $1.94 ($1.46 last year), AAA said.

Nationwide, the average price for mid-grade is $1.82 ($1.39 this time last year), premium is selling for $1.88 ($1.44 last year) and diesel is $1.81 a gallon ($1.31 last year), AAA said.

Oil company executives say crude oil is not the only factor in a market driven by supply and demand and competition among the various companies.

Fred Gorell, spokesman for the Chevron-Texaco Corp., which brands Chevron stations -- but not Texaco stations, which are owned by Shell -- says often companies face major marketing problems when prices are high.

Gorell said a company that bought crude before the war at $38 a barrel fearing the price would rise because of the conflict only to see it go down because Arab oil producers overproduced to meet a sudden sharp demand for crude cannot sell at much higher a rate than the refiner who bought at the much lower price.

"We can't put a price of $2.51 a gallon on it when the station down the street is selling it for the market price otherwise even our most loyal of customers will turn away from us," he said. "Oil companies do not like selling at high prices because we struggle to break even and cannot always recoup our costs."

Gorell said it is "very difficult" to get that message out to consumers because "gasoline prices are an emotional thing when they are rising."

However, he said, today is just "a snapshot." Consumers, he said, need to look at the average price over time. He noted that in late 1998 and early 1999 pump prices were around $0.99 per gallon -- the lowest in years. At the time, crude prices were down to $10 to $12 a barrel, he said.

"That too was just a snapshot, not the reality," Gorell said. "The reality is the average price over a period of time."

Gorell said his company's customer surveys show that the No. 1 concern of consumers is not price, but rather "a reliable supply" of fuel products. Motorists do not want to return to the days of long lines at stations that are short on fuel supplies, he said.