Gasoline prices to surge this summer

Dan Kulin and Heather Rawlyk

Friday, April 2, 2004 | 11:30 a.m.

Las Vegans have suffered through the highest gasoline prices ever in recent weeks, and industry experts and watchdogs say the prices will probably continue to rise through the summer.

"There's more bad news than good news," AAA Nevada spokesman Sean Comey said. "Most market forces seem to be at least pushing prices to stay high or go higher."

An average gallon of regular unleaded gas in Nevada hit a record high of $2.07 on March 10 and was at $2.05 on Thursday, according to AAA figures. A look at some area gasoline stations Thursday showed prices ranging from $2.03 to $2.16 for a gallon of regular unleaded.

Comey said he "wouldn't bet against" Nevadans seeing more record high gas prices this summer, as more people hit the road, increasing demand.

But while the price at the pump might be higher than ever this summer, Comey said AAA officials don't expect it to affect tourism.

"People take driving vacations because they see them as good values. An increase in the cost of gas is going to make it more expensive but not enough to stop most," Comey said. "On a trip from L.A. to Vegas maybe it would be (an extra) $20. Is that enough? For most people no."

Brenda Kuhn, 27, of Los Angeles, was in Las Vegas Thursday and said it would take quite a price hike to keep her home.

"I think gas prices are high right now and could probably stand to get a little higher without being unbearable," she said. "As long as it doesn't hit $4 a gallon or anything I'm still coming to Vegas. Nothing's going to keep me from my weekends in Vegas."

Another Las Vegas visitor, Craig Quarles, 36, of San Diego, said he probably wouldn't return during the summer regardless of the gas prices.

"I'd say the heat would keep me away more than high gas prices would," he said.

Peter Krueger, of the Nevada Petroleum Marketers Association, said that while no one can say how high gasoline prices will go, he expects they will increase.

"The demand will go up but I sense there will be artificial pressure to keep the price down. Probably under $2.50," Krueger said.

Krueger said he expects the Bush administration to push OPEC countries to keep the price down, as well as putting pressure on U.S. oil companies to keep the price down.

Krueger and others said the increased demand for gasoline during the summer season will push up prices.

Comey and others also said that while the price of crude oil has fallen a little recently, the price is still high.

Fred Rozell, retail pricing director for the Oil Price Information Service, based in Lakewood, N.J., gave a similar assessment.

"There's a lot of political pressure on gas prices," Rozell said. "But in the summer we use more gasoline than we produce. The prices are going to bloat up in late July into August. The price won't reach $3 but it will be higher than we're seeing right now. You can bank on that." During peak summer time, Americans use 9.5 million barrels of gas a day, but the nation's refineries produce only 8 million barrels a day, Rozell said. Nevada is in a worse situation than most states because the state gets its gasoline from California, which already imports about 10 percent of its refined gas from refineries in Texas and Washington, and from other countries.

California Energy Commission spokeswoman Claudia Chandler said: "The real problem is that there are not enough refineries to meet demand."

California has 13 refineries that make gasoline. Two of them are down for maintenance now but are expected to be back up and running next week, she said.

Another refinery has a problem affecting its capacity, but it was unclear Thursday how bad that problem was, she said.

Tim Hamilton, an Olympia, Wash.-based petroleum consultant for consumer groups who has long monitored gasoline trends in Nevada and California, said the problem is the lack of refinery production, which creates a shortage of supply and leads to increased prices.

Hamilton said any disruption in production could cause the price of gasoline to jump from 25 cents to $1.

"The key is what happens if we have a local refinery fire," Hamilton said. "The wild card that drives all this is the refineries."

Hamilton and Comey said the announcement earlier this week that OPEC will cut its production by 4 percent shouldn't affect gas prices here.

Comey said the OPEC reduction in production was expected months ago, and caused a slight bump in gas prices then.