War with Iraq may have little impact on oil prices

Thursday, March 20, 2003 By MICHAEL LEMANSKI Norwich Bulletin; mlemanski@norwichbulletin.com

Given the way a Middle Eastern leader's mild case of indigestion seemingly causes pump prices to fluctuate, it's reasonable to expect oil prices to rise when bombs fall on Iraq. Not so, according to the American Automobile Association.

"They don't expect anything to happen in terms of prices," said Fran Mayko, spokeswoman of AAA's Hamden office. "There are projections of higher prices, but it's hard to project at this point.

"There is absolutely no reason to rush to the gas pumps when war is declared."

Locally, gas prices are higher than a month ago -- and way higher than a year ago.

But, according to experts, it's due to a variety of factors ranging from war jitters, labor strife in oil export giant Venezuela (now settled), and a very cold winter.

Throw in the fact the U.S. gets most of its imported oil from Saudi Arabia, Mexico, Canada, Venezuela and Nigeria, Mayko said logic dictates an Iraq war will not harm U.S. supplies.

Proving that point Wednesday was the crude oil markets on the New York Mercantile Exchange. For the first time in months, crude oil was below $30 per barrel at $29.88, down from a high of $40 this year.

Still, Mayko points out, if people think gas is an issue and rush out to buy it after the "special reports" start appearing on TV, gas problems could be a self-fulfilling prophecy.

"That, right now, is the biggest worry," Mayko said, adding war jitters sometimes are worse that the war itself. "I think so. I think speculation has a lot to do about gas prices."

In short, Mayko said, motorists shouldn't panic when the bombs drop and fill up. If they do, supplies will be temporarily low, a condition that has already happened in southern California, she said.

"If people start to panic, it's only going to create problems and needless fuel shortages," Mayko said.

Local concerns

For example, in eastern Connecticut Tuesday, there were no signs of panic, but motorists were wandering the highways looking for the best gas deals, which are - on average -- up a nickel from a month ago and up 49 cents from a year ago.

Generally, the best prices -- under $1.70 -- can be found in Willimantic, Jewett City, and a couple of Brooklyn gas stations (along Route 6). Although some scattered, less than $1.70 stations, may be around.

The lowest price, apparently, was the Willimantic Xtra Mart on Main Street, which was $1.65 per gallon Tuesday.

For Brooklyn resident Tony Cataldo -- a physical therapist whose house calls put him on the road often -- high gas prices mean a drop in income.

"Theoretically, it cuts into what I make," Cataldo said Tuesday, filling up on $1.73 per gallon gas at the Brooklyn Xtra Mart on Route 6.

Norwich attorney John M. Newson said his 1993 Corvette requires ultra unleaded, which costs $1.97 per gallon at the Norwich Sunoco station on West Town Street, where he was filling up Tuesday.

He said the high fuel costs are making it more expensive to drive.

"It's high, but I remember a couple of summers ago. It was a little over $2 a gallon," Newson said, adding high prices are a tiny sacrifice for people to make. "If that's what is going to happen, then, I guess, we're going to have to deal with it. When you buy a car like this, it's going to cost you more money."

As for the consequences, Norwich gas station attendant Patel Anup -- whose family owns the West Town Street Sunoco -- said the war could hurt his family, especially if travel habits dwindle.

"Every week it's going up by 3 cents," Anup said. "You're losing because if people don't drive, it's not a good thing."