Gas prices up 10 cents in one week

www.bismarcktribune.com By MARK HANSON, Bismarck Tribune

Filling a 12-gallon tank with regular unleaded gasoline will cost you $1.20 more today than if you had refueled earlier this week. The price for a gallon of gas in Bismarck jumped from $1.49 to $1.54 during the middle of the week, and then to $1.59 by the end of the week.

And if certain world situations remain the status quo, that price may just climb even higher.

We're paying more at the pump mainly because today Venezuelan oil workers are entering their 62nd day of a strike. Another factor is the uncertainty of what the United States will do about Iraq.

Ron Ness, executive director of the North Dakota Petroleum Council, said the Iraqi situation is just a minor factor in crude oil prices, and subsequently gasoline prices, increasing.

"Venezuela is much more serious than Iraq," he said.

A lot of refined oil is piped up from the Gulf. Venezuelan crude oil makes its way to refineries in Mexico before coming into the United States as gasoline.

"Venezuela doesn't get as much media attention as it deserves," Ness said. "It's much more volatile."

It's such a big deal because Venezuela is the world's No. 5 oil exporter and key supplier to the United States. The country normally ships more than 3 million barrels a day, but was down to about 200,000 barrels a day in December. It was reported Friday that output stood at just a little more than 1 million barrels.

Russ Hanson, president of the North Dakota Petroleum Marketers Association, said the increase in crude oil prices has boosted wholesale gasoline prices. Hanson said he thought prices at the pump would have climbed sooner because of the wholesale price increase.

Arch Simonson, owner of Simonson's Station Stores across the state, including Bismarck, said prices are up at the pump simply because wholesale prices are up.

According to a Washington Post story, the rule of thumb among oil economists is that for every $4 increase in the price of a 42-gallon barrel of crude oil, the price at the pump jumps 10 cents a gallon. Crude oil prices Friday were about $33.50 a barrel. It was $28 a barrel in November.

So, if the situation in Venezuela doesn't improve, and the United States goes to war against Iraq, we could see crude oil prices continue to rise and the price at the pump go higher.

As Hanson said, if we have an extended war, and if Iraq president Saddam Hussein decides to harm the oil infrastructure in Iraq, much like he did when he set oil fields on fire in Kuwait at the end of the 1991 Persian Gulf War, "then it could be painful for a while." (Reach reporter Mark Hanson at 250-8264 or mark@ndonline.com.)