Fill-ups take big bite out of wallets

www.news-star.com By JENNIFER PITTS SNS Staff Writer

Over the last couple of months, each fill-up at the gas station has pulled a little more hard-earned cash out of nearly every American consumers' pocket.

On Dec. 23, Loves Country Store on Kickapoo was selling unleaded gasoline for $1.29 per gallon, said Loves Public Relations Director Jenny Love Meyer. Two months later, that price has jumped more than 25 cents a gallon to the current price of $1.55.

In the world of trade, the speculation of war seems to be playing out on Wall Street where it's being traded as a commodity, said Meyer.

"Speculation has driven prices," she said. "World event happenings can drive the price up or down."

Tecumseh Phillips 66 owner Dwight Wise also said the increase has something do with speculation.

Gas prices have escalated 25 cents a gallon in the last two months.   "We're paying high prices for speculation," he said. "I think all of this price increase is baloney. It's price gouging. Some increase I understand, but not this."

As he understands it, Wise said gasoline used to be sold according to supply and demand, rather than as a commodity where speculation can become a factor.

Phil Hall, owner of MacArthur 66 Auto Repair and Service, said speculation is why he quit selling gasoline two years ago on Sept. 11.

"Every gas station around here jacked their prices up and they didn't know why they just jacked them up," he said.

One gas station along Interstate 40 was selling unleaded gasoline for $3.50 a gallon, he said.

"That's when we decided we were going to quit selling," Hall said.

Meyer said speculation is only one factor involved in rising prices.

"There's a lot of different things that go into the price of gas," she said.

Of the $1.55 per gallon price at the pump, 49 percent is the cost of crude oil, 29 percent is taxes, and 12 percent is refining costs, Meyer said. The remaining 10 percent is made up of transportation costs and retailer markup.

The oil strike in Venezuela has inflated the world price of crude oil, she said. The strike began months ago and is currently being resolved, she said.

"Venezuela is not a huge producer of oil, but it was enough to increase the world price," Meyer said.

A hard winter in the eastern portion of the United States also has contributed to the price increase, she said.

"They use heating oil that comes from crude oil," she said explaining it has contributed to a higher demand for the product this year. "This has not been a good winter for the cost of fuel."

If the United States engages in war with Iraq, she said she believes the price will continue to increase, depending on a few other variables.

She said it depends on if and when a declaration of war is made.

"Timing is part of it," she said explaining there are typical times of year when less gasoline is being produced. "In spring, there is a time when refineries shut down for a transition from winter fuel to summer fuel. There is less product out in the market during that time."

Less product means higher prices, she said.

"Unfortunately, I think the price will go up if we go to war with Iraq," Meyer said.

When asked if the price of gasoline could top $2 per gallon, Meyer said, "I hope not."