TJC PROF SAYS GAS PRICES TO STAY HIGHER
www.zwire.com By: GREG JUNEK, Business Editor March 05, 2003
East Texans can expect gasoline prices to remain higher than they were several months ago - even if a war campaign in Iraq is successful, a college department chairman who follows the energy market said Wednesday.
Ashton Oravetz III, Tyler Junior College chairman of business administration, said the strike in Venezuela and resulting shutdown of its wells probably permanently hurt that country's oil production.
Also, not much crude is in storage, so changes in crude oil prices are reflected quickly in gasoline prices.
"It all comes down to Venezuela," Oravetz said. "We're probably going to hit Iraq next week or the week after. There's no gouging that I can see; (the price at the pump) is just based on crude oil prices."
West Texas Intermediate Crude and IPE Brent Crude have been running around $33-$34 per barrel, and Oravetz said he does not believe crude prices will be lower than $25-$28 a barrel for a long time.
"I don't think we're going to have a big dropoff. We're going to get rid of the war premium in there," he said. "Right now, gasoline prices could go up 10 cents next week on the war premium."
But in the near term, a person should not look for gasoline prices less than about $1.30 per gallon, even if the Iraq situation ends well, Oravetz said.
Tyler stations on Wednesday said they had seen some increases and some decreases in the price per gallon of their gasoline grades.
A clerk at Food-Fast Convenience Store No. 55, 5502 Old Bullard Road, said the price of unleaded plus dropped two cents, to $1.61 per gallon, and premium unleaded dropped from $1.71 per gallon to $1.67 per gallon in the last couple of days. Unleaded gasoline stayed the same at $1.55 per gallon.
All prices exclude the nine-tenths of a cent tacked onto every gallon.
Kirby Food No. 2, 4833 Troup Highway, reported no change in the last couple of days, with unleaded at $1.55 per gallon, unleaded plus $1.65 per gallon and premium unleaded at $1.75 per gallon.
Kidd Jones, 11421 Texas Highway 64 West, was selling regular unleaded gasoline Wednesday for $1.51 per gallon. The clerk said the price on that grade dropped two cents Tuesday morning. Super unleaded, however, rose two cents to $1.67 per gallon.
Oravetz said he doubts Venezuelan production will get back to where it was prior to the strike. Wells were turned off and many wells in Venezuela are older wells that produce heavy oil, and one cannot just turn a well on and off.
"They have to be taken care of, they have to have treatments to keep them producing, and when you shut them in you do permanent damage to the well bore and the reservoir," he said. "I think there could be a permanent reduction in Venezuela, which affects the world supply of oil."
Also, some wells in Iraq are not in good condition. Even if the Iraqis do not destroy their wells in war time, it will take a lot of investment to improve their production, Oravetz said.
He added China is a country that has, in the last few years, begun importing its own oil, which taps into the supplies other countries have been using.
Greg Junek is Business editor. He can be reached at 903.596.6280. e-mail: business@tylerpaper.com