Price jump at pump puts gas at record level - Natural gas, crude also up
www.nola.com Saturday March 08, 2003 By John M. Biers Energy writer
If gasoline prices seem higher than ever before, that's because they are.
Louisiana is one of more than a dozen states that have reached historic highs in recent weeks in terms of prices at the pump. The average price around the state Friday was $1.60 per gallon of regular, up from $1.50 a month ago, according to AAA's Louisiana chapter.
It's a high gasoline prices have maintained since Feb. 20, when they topped the previous peak of $1.58 set in May 2001, AAA spokesman Don Redman said.
Economists are increasingly worried about the impact of high gasoline prices as part of a broader energy crunch that already has produced record-setting natural gas prices and unusually high crude prices. Crude closed Friday at $37.78 on west Texas intermediate, compared with $23.71 one year ago. Natural gas closed at $7.43, compared with $2.73 last year.
If not abated, the high gas prices will curtail driving this summer, Redman predicted. But the association continued to see brisk business last week from Carnival-weary locals who fled the city for Disney World and other destinations.
"It doesn't appear yet that we've seen people dramatically change their lifestyle," Redman said.
Frank Goloforo, owner of Big G's Trash Hauler in Kenner, said he was rankled by the increase.
"It's disgusting," said Goloforo, who is paying $1.83 per gallon for diesel. "I should be paying $1.40."
High gasoline prices, the subject of a front-page story in Friday's Wall Street Journal, have also revived interest in energy on Capitol Hill. Although the top concern in Washington remains the possible war in Iraq, energy has risen as a priority in recent weeks, said Ken Johnson, a spokesman for House Energy Committee Chairman Rep. Billy Tauzin, R-Chackbay.
"It's a problem that could become a crisis overnight," Johnson said.
Though the natural gas price spike has been partially caused by cold weather this winter, the rise in gasoline prices is primarily linked to geopolitical events of recent months.
Venezuela, one of the United States' top sources of foreign oil, essentially ceased production for several weeks this year during a strike directed at President Hugo Chavez. Energy experts say it may take months for the South American country to fully restore production.
The energy markets also have been spooked by the potential U.S.-led war against Iraq. Although Iraq itself represents a small percentage of world oil production, the fear is that a military conflict could destabilize the oil-rich region. This anxiety has helped drive up crude prices, which has in turn discouraged U.S. refiners from purchasing oil, which has led to an erosion of U.S. gasoline supplies.
The high prices have sparked renewed calls in Washington for President Bush to release oil from the Strategic Petroleum Reserve. The administration continued to say Friday that it would authorize a release only under a "severe price disruption," a Department of Energy spokesman said.
Johnson said Tauzin agrees with Bush's restraint on tapping the reserve but that Bush needs to state clearly that he will take action if such a disruption occurs. "Just the promise he would release the oil would calm things down a bit," Johnson said of the financial markets.
Tauzin plans to advance an energy bill in coming weeks, with the House expected to take up the bill before the spring recess. The timetable is less certain in the Senate. Despite 18 months of activity, the energy bill died last fall when the two chambers could not agree on electricity legislation, drilling in Alaska and various other issues.
Bill Wicker, a spokesman for the Democratic staff of the Senate Energy Committee, said high energy prices continue to lag behind Iraq and the North Korean crisis as legislative priorities.
"It's definitely heating up, but it's not at full boil yet," Wicker said of energy. . . . . . . .
John Biers can be reached at jbiers@timespicayune.com or (504) 826-3494.