OPEC can hike oil output if war hits - Tired of ever-rising gas prices? Summer outlook is even higher
www.gomemphis.com By Jane Roberts robertsj@gomemphis.com March 11, 2003
At Bob McVay's Amoco at Union and Cooper, customers grumble all day long about the price of gasoline, said Patricia Adair, cashier. They read the increases like tea leaves, looking for a sign that the war in Iraq is about to start.
"If it goes up again even higher, they say that's when the war will start," she said.
Nothing teaches her more about her customers' politics than rising gas prices.
She's learned a lot in three months because prices at the pump are up for the 13th time in 12 weeks, hitting a 21-month high of $1.712 per gallon on Monday.
In the Mid-South, the average price for regular self-serve is $1.69 a gallon. Premium grades are going for $1.86.
At McVay's Amoco, regular was $1.60 on Monday.
Gasoline has not been this expensive since mid-May 2001, when the national average was a tenth of a cent a gallon more, according to the U.S. Department of Energy.
But then there was no threat of war.
Consumers finding themselves in this situation now likely haven't likely felt this uneasy since the days of rationing in the 1970s. Not only are inventories down due to a long winter in the Northeast, the price was up even before the cold and snow because of unrest in Venezuela, the world's fourth-largest exporter of crude oil.
U.S. crude oil inventories are at a 27-year low, and crude prices last week reached a 12-year high, which bodes continued price increases as the peak summer driving season approaches.
The Energy Department predicted U.S. retail prices will rise to a record average of $1.76 a gallon in April.
Archie Dunham, chairman of ConocoPhillips, which has the largest U.S. oil-refining business, said low gasoline supplies will keep pump prices high during the peak demand period.
"There will be a shortage of gasoline in the summer driving season," he said Monday.
Across the nation, the average price for regular gasoline is already up 48.9 cents from this time a year ago, a fact not lost on Charlie Yonkers, who drives as an independent contractor for Yellow Cab.
"I was paying about $20 a day for gas several months ago. Now, I'm paying about $30," he said.
Yonkers has no recourse but to work harder because fare limits are set by the city. He skips lunch and breaks some days to fill the gaps.
"If I stay busy and go as quickly as I can, that is going to take care of the gas situation," he says philosophically. "I've had to pick it up some."
There have been other hard times in his 11 years as a full-time cab driver, but this feels different. He's now routinely paying $1.53 to $1.61 for regular gasoline.
Hamilton Smythe IV, president of Premier Transportation, is eating a lot of fuel expense to keep from raising rates for his limousine and charter bus customers.
"The cost of fuel on average has gone up 25-30 percent, which is a significant factor. At this point, we are absorbing the increases, and it is tough," especially on airport runs from the hotels out east because they include a lot of deadhead mileage, he said.
If he has to raise prices, he'll start there.
"On our long-term contracts, I'm not comfortable going back now and raising the price. We gave them a price, and we're going to honor it. If someone new calls tomorrow, we may quote a higher price."
Smythe is also president of Checker Cab and Yellow Cab.
Domino's Pizza is still charging $1 for delivery, said Bekki Gentry, manager at the Union Avenue store. The drivers are the ones making up the difference because their pay per delivery has not increased.
Happy Shirt laundry has not increased its delivery fee yet, but it may.
"We're paying a lot more money than we wish to," said manager Zeke Wuchina.
The dry cleaner runs two daily routes from Midtown to Germantown, putting on more than 500 miles a week for the 35 percent of its business that is delivery.
The most uncertain variable is the pending war in the Middle East, said Lisa Wheeler, spokesman at Premcor refinery in Memphis.
Premcor supplies most of the gasoline stations in the city from its refinery here, which it bought this month from Williams Companies in Tulsa, Okla.
The price of gasoline typically goes up before the summer driving season, she said. This is early for the spike, suggesting more hikes ahead.
- Jane Roberts: 529-2512