Gas prices reach record - It's unclear why this region's are higher than the national average
seattlepi.nwsource.com Wednesday, February 26, 2003 By PAUL NYHAN SEATTLE POST-INTELLIGENCER REPORTER
Gasoline prices hit a record level at Seattle-area pumps yesterday, forcing drivers around the region to spend more to fill their tanks or find new ways to get around town.
In Seattle, Bellevue and Everett, the average price for a gallon of regular unleaded gasoline jumped to $1.77 yesterday, the highest level since AAA began tracking average daily prices in the mid-'70s. Even higher prices can be found around the city, with one station in Magnolia charging $2.13 for a gallon of premium gasoline and another on top of Queen Anne Hill charging $1.89 for a gallon of regular.
Looming war with Iraq and labor unrest in oil-rich Venezuela are combining to force the price of crude oil, and thus refined gasoline, higher, industry officials said. Impending war and the strike help explain why the national average price for a gallon of unleaded gas rose to $1.66 yesterday from $1.13 a year ago, according to AAA.
But, the reasons behind the spike in Seattle gasoline prices are cloudier. Oil companies and wholesalers don't provide specific pricing data, according to local retailers. And West Coast prices have run counter to national trends in the past.
Whatever the cause, the spike is generating suspicion among local drivers, who say high gasoline price are forcing them to change their driving habits.
Bill Travers is ready to walk the 10 blocks to work and more willing to hop on his Vespa, which gets up to 60 miles per gallon, than drive his sports car.
"I think they (oil companies) are gouging a little bit, just to take advantage of impending disaster," Travers said, after paying $10 more for half a tank of gas then a few months ago. "I really wonder, as a lot of people do, how legitimate this is." Phil H. Webber / P-I Matt Beers checks tires at a station in Magnolia, where premium unleaded was going for $2.13 a gallon.
Travers is not alone. Sixty-five percent of respondents are ready to alter their driving routines because of higher gas prices and a threat of war with Iraq, a Yahoo! Autos survey found yesterday.
In fact, 23 percent of those surveyed said they are prepared to buy more fuel-efficient cars.
As drivers look to assign blame, gas station owners say they are not the culprits. Their pumps reflect the fluctuation in prices charged by wholesalers and resellers.
At Rick's Chevron on Fifth Avenue in Seattle, owner Rick Hubbard learns of price increases when a message appears on his cash register, linked directly to Chevron. The alert eventually tells him the price of wholesale gas rose or fell that day.
Hubbard decided to post the increases on his pumps to explain to customers why they were paying more at his pumps.
"The only time they (retailers) change their price, usually, (is) when they get an increase from the dealers," said Hubbard, who has sold gas in Seattle for 35 years.
Gas prices can fluctuate from neighborhood to neighborhood, in part because wholesalers use market data and formulas to set prices, according to Tim Hamilton, executive director Automotive United Trades Association in Olympia.
"Gasoline is not priced by the cost of doing business, it is priced by the ability to charge," Hamilton said yesterday.
And Hubbard says companies don't share the data with him.
The "price of crude is all they tell me," he said.
The market sets the price of gasoline, Shell Oil Co. spokesman Timothy O'Leary said. The company considers myriad details, everything from traffic and shopping patterns to neighborhood characteristics.
Shell, however, said it doesn't comment on pricing in Seattle or any particular location.
U.S. drivers faced a similar situation in 1990-91 during the Persian Gulf War, said Edward Rice, associate professor of finance and business economics at the University of Washington Business School.
As the United States prepares for war, oil companies could be holding more fuel in reserve, guarding against a disruption in supplies, and that could be forcing gas prices higher, he said.
And gasoline prices are not yet at record levels elsewhere in Washington, although many are close. In Bremerton, the average daily price for a gallon of regular unleaded gas rose to $1.69 yesterday, still below that region's record of $1.74 set in September 2000, according to the latest AAA data.
Meanwhile, Bellingham drivers paid, on average, $1.75 for a gallon of regular unleaded gas yesterday, also below the record of $1.80 set in 2000.
With so much uncertainty in the global oil market, it is difficult to predict where gas prices will move in Bellingham, Seattle or anywhere in Washington.
"I don't think anyone really knows. It's kind of like the stock market," said AAA Washington spokeswoman Janet Ray.
P-I reporter Paul Nyhan can be reached at 206-448-8145 or paulnyhan@seattlepi.com