Wednesday, Sept. 1, 2004 | 11 a.m.
Harold Scranton wants to visit friends out of state over the three-day Labor Day weekend, but with gasoline prices shooting above $2 a gallon in Las Vegas and elsewhere, he is not sure he's going to make that trip.
"I was going to go to California, but now I'll have to think about it," said the Southern Nevada resident of nine years as he filled his Chevrolet sedan at the Rebel Station at Eastern Avenue and Windmill Parkway last week.
"It costs me about $28 to fill up, but when prices were at record highs this past spring, I was paying $40 or more. It adds up. It's a shame gasoline prices are going up just when we were getting a little breathing room."
Meanwhile oil industry analysts say a fire or any other major glitch at a refinery at this time of the year could mean Scranton and other Las Vegans could face pump prices rising to greater than $2.50 a gallon.
AAA is projecting a 2 percent increase in cars on the road over last Labor Day based on responses to a survey asking how many motorists plan to travel 50 miles or more from home by car for what traditionally marks the end of the summer tourism season.
The automobile association estimates of the nearly 287,000 Nevadans who will travel over the three-day weekend, and 82 percent, or 235,000, will drive. Nationally, AAA is predicting that 34.1 million Americans will travel during Labor Day.
The travel factor plus rising crude oil prices -- which are still above $40 a barrel after reaching $49 a barrel two weeks ago -- are causing pump prices to rise, AAA spokesman Sean Comey said.
But the big question for consumers is, will those prices drop off as demand decreases, as commonly happens after Labor Day?
Federal officials say that while the drop in post-Labor Day prices won't be as significant as it usually is, there will still be a decline.
"With crude oil prices recently setting new records at more than $45 a barrel, there is pressure on gasoline prices to rise in the coming weeks, except the gasoline demand typically falls significantly after Labor Day," the Department of Energy's Energy Information Administration said.
"As a result gasoline prices might not decline as much in September as they would have if crude oil prices were not at such lofty levels."
Another factor is supply. The American Petroleum Institute, a Washington, D.C.-based trade association that represents 400 oil companies in the United States, says inventories for reformulated gasoline, the California blend that is sold in Nevada, are at 1.5 million barrels, down from 1.9 million barrels in May and 7.3 million barrels a year ago, Ron Planting, an analyst for the API, said.
The dropoff stems mainly from a switch of the additive MBTE to Ethanol in reformulated gasoline sold in Western states, he said.
"It's looks like a big change but you're not running out," Planting said. "It's just that it's moved to a different category."
Tim Hamilton, an Olympia, Wash.-based petroleum consultant for consumer groups who for 20 years has monitored gasoline trends, said he expected post-Labor Day gas prices to rise because of that smaller supply.
A broken pipeline carrying gasoline from Texas to Arizona last year caused the cost of fuel in Nevada to spike six cents in a day while Arizona residents scrambled after operators shut down the line.
This year a similar glitch could force Las Vegas prices to greater than $2.50 a gallon, Hamilton said.
And, Hamilton said, when you factor in a greater demand for fuel over a busy holiday weekend, consumers will see noticeably higher fuel prices.
That prospect was not lost on motorists pumping gasoline last week.
Jessica Berg, a Las Vegas resident since 1996, was filling her Ford Escape sport utility vehicle at the Arco station at Flamingo and Mountain Vista roads, accepting that high gas prices are a fact of life.
"Don't they (oil companies) always raise gasoline prices every holiday?" Berg said. "What can I do about it? I definitely shop around for the best price and $1.98 looked good so I stopped here to fill up. But just a couple of weeks ago I paid $1.87 at the Chevron at Vegas Valley (Drive) and Nellis (Boulevard)."
Joe Sparano, president of the Western States Petroleum Association, a trade group that represents 26 gasoline companies and refineries in six Western states including Nevada, said other factors keep pump prices high in Las Vegas and statewide.
"Nevada has the second highest taxes on gasoline in the nation at 54 cents a gallon," Sparano said, noting that 43 cents per gallon is the national average. "Crude oil and taxes combined account for 70 to 75 percent of the cost of gasoline at the pumps."
Also, he said, California refineries have to spend 5 to 10 cents more per gallon to create a product for Las Vegas that meets the state's standards for cleaner-burning fuel.
Nevada, which this morning claim an average price of $2.06 per gallon of regular, passed New York to claim the fourth highest prices in the nation behind Hawaii, Alaska and California, AAA said.
Gasoline in Nevada was selling for $2.08 for a gallon of regular this morning.
Still lurking in the price factoring for September is crude oil, which were at 41.30 a barrel on Monday, the lowest since July 26.
Comey said generally pump prices increase or decrease 2.5 cents per gallon every time crude oil prices rise or fall by $1 per barrel.
But the rise or fall in pump prices does not occur right away. Ray Dougher, spokeswoman for the American Petroleum Institute, said crude oil prices generally take two to four weeks to be reflected at the pump.
"It usually is an easy call that gasoline prices will decrease after Labor Day, but it is not such an easy call now," Dougher said.
Peter Krueger, director of the Nevada Petroleum Marketers and Convenience Store Association, said he expected gasoline prices after Labor Day would drop as long as refinery supplies remained strong.
"The real wild card is if the refineries stay up and working," Krueger said. "Then we'll see a lot less pressure on street prices for gasoline, even if crude oil prices remain high."
If there are no problems at refineries, Krueger said, he would expect prices to be back at $1.95 by mid-September.
Sun reporter Stephen Curran contributed to this story.
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