Las Vegas Sun

March 28, 2024

No end in sight for rising gasoline prices

AAA reported Wednesday that most communities in Nevada saw double-digit gasoline price hikes since mid-February and most motorists in the state pay more than $2 per gallon.

The statewide average is now $2.06, up 24 cents since Feb. 18. The current average in Las Vegas is $2.10, up 27 cents since Feb. 18.

The Energy Information Administration said Wednesday that gasoline supplies declined by 800,000 barrels last month to 5 percent below a five-year average. That caused next month's gasoline futures contract on the New York Mercantile Exchange to rise nearly 3 percent, the New York Times reported today.

"Speculators on the New York Mercantile are betting that the oil refineries will gouge the consumers," said Tim Hamilton, an Olympia, Wash.-based petroleum consultant for consumer groups who has long monitored gasoline trends in Nevada and California.

"But that traded fuel affects just a very small percentage of consumers on the East Coast and will have no impact on Las Vegas or the West."

However, experts say, that trend in New York is a wake-up call to consumers who thought skyrocketing gasoline prices were limited to the West Coast."

"Some people on the East Coast might have taken amusement at our expense," said Sean Comey, Nevada spokesman for AAA, formerly the American Automobile Association, which conducts a nationwide survey of gasoline prices. "But what has happened to us may soon happen to them.

"I was interviewed by the Boston Globe last week on this issue. It (skyrocketing prices elsewhere) certainly looks like it is taking place. Our prices went up quicker and sooner. Now the rest of the country is following suit."

But that does not mean it is time for long-suffering Las Vegans to gloat.

"Will other parts of the country pay as much as Nevadans pay for gasoline? Likely not," Comey said. "Our suffering is more extreme with higher taxes, the inability to import from other sources and pipeline costs. Those forces that have made our prices higher will continue to keep our prices higher."

And Comey says, "it is a distinct possibility" gas prices will rise in Las Vegas and statewide this spring and summer as economists are predicting.

"But it is very difficult to predict by how much they will rise because there are so many factors to consider for the long term," Comey said, noting that locally, prices in the past week have "hit a plateau."

For the short term, "there is reason to be cautiously optimistic," Comey said. "But I would emphasize caution not optimism. We are one problem away -- particularly a refinery problem -- from another round of price hikes."

Hamilton agrees not only that Las Vegas pump prices will continue to rise this spring and summer but also well down the road.

"If the Bush administration allows the perfectly good Shell refinery in Bakersfield to close in October, as is planned, prices in Las Vegas will rise even more," Hamilton, a longtime critic of the big oil conglomerates, said of the facility that produces 2 percent of California's gasoline, some of which is sold locally.

"The refineries are intentionally shorting the market so they can raise prices," Hamilton alleged. "Under this system, we will not have lines at empty pumps, and that's the good news. The bad news is that when we reach for the nozzle we'll get burned. Some people may not be able to afford gasoline."

The rising cost of gasoline, jet fuel and other petroleum products again has become a political issue.

On Monday, Sens. Harry Reid, D-Nev., and Barbara Boxer, D-Calif., and Rep. Mike Thompson, D-Calif., called on the Bush administration to stop stockpiling crude oil in the nation's Strategic Petroleum Reserve and release some in an exchange to be restocked in the future.

They said that would ease demand for gasoline and help moderate prices.

The price of gasoline nationwide this morning was $1.72 per gallon for regular unleaded, the grade upon which market trends are determined. That is 8 cents more than a month ago, AAA said.

In Nevada, which has the nation's third highest prices behind California ($2.15) and Hawaii ($2.09), the average price for a gallon of unleaded today was $2.06. No other state has cracked the $2 per gallon mark, AAA said.

In Las Vegas, an average gallon of unleaded gasoline today costs $2.10, up 27 cents from a month ago. Mid-grade is selling for on average $2.22 (up 28 cents from last month) and premium for $2.30 (up 30 cents from last month), AAA said.

Earlier this month, the Energy Information Administration, part of the federal Department of Energy, warned that gasoline prices might rise to a nationwide average of $1.83 per gallon in April, well past the previous record -- not adjusted for inflation -- of $1.75 a gallon in August 2003.

After adjusting for inflation, though, the Energy Department says that oil and gasoline prices today are well below what they were in the early 1980s, early in the eight-year war between Iran and Iraq.

The price of crude oil has risen 20 percent since September to a 13-year high, selling Wednesday at $38.18 a barrel.

Crude oil prices, the most important factor in the price of gasoline, are expected to remain high, perhaps to climb still higher, as concern grows over the possibility of disruptions in the oil industry of Venezuela, one of the largest suppliers to the United States.

Tension between the Venezuelan government of President Hugo Chavez and his domestic opponents has weighed on oil markets that were already under some strain from surging demand in China, the slow recovery of Iraqi exports in the violent aftermath of the Iraq war and signs of renewed assertiveness in OPEC.

Venezuela is among the largest members of the Organization of the Petroleum Exporting Countries, which is pressing forward with production cuts announced in February. Venezuela has been an outspoken supporter of high prices.

Other important factors contributing to higher gasoline prices include the need for refineries to comply with environmental regulations aimed at producing cleaner-burning gasoline that have been implemented in piecemeal fashion throughout the country in recent years.

The new rules have resulted in more than 20 different gasoline formulations being introduced, up from just two blends 20 years ago, regular and premium, according to the National Association of Convenience Stores, whose members sell about three-quarters of the nation's gasoline.

Few economic trends point to relief in gasoline prices as the nation heads into warmer weather, a period when motorists usually take longer road trips.

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