Gas prices predicted to drop

www.chicoer.com By LAURA URSENY - Business Editor

Few in the gasoline industry will guess what drivers might be paying at the gas pumps, but there seems to be an indication it will be lower, even with the latest events of the Middle East.

Some indication that prices would go down came on Thursday when the price of crude dropped. It reportedly went up slightly when news that a handful of Iraqi oil wells were on fire.

Talking about the high spikes of the past month, Warner Petroleum general manager Garth Strick said, "We're thinking around here that gas prices went up because of the expectation of war and a couple of other things." Warner distributes Chevron and CFN gas and products.

An automobile association survey of California's gas prices showed that Chico had about the lowest, at an average of $2 a gallon. In January, the average per-gallon price was $1.47.

Ultimately Strick believes the price will drop, maybe as low as the $1.60 to $1.80 range, but not until the fall because of the expensive conversions to MTBE-free gasoline.

"But we're not going to see it in the double digits like we did last year."

California struggles with gas price influences different than most other states, including high taxes and environmental regulations.

Part of that steep hike was rooted in state regulations that puts an end to use of MTBE, which has been blamed for groundwater pollution.

Nevertheless, while it suffered from the most dramatic leap in prices, Chico still enjoyed the state's cheapest gas prices for several weeks, according to California State Automobile Association.

According to AAA, Chico residents still saw gas prices averaging $2 a gallon, lower than any other city's average, according to AAA.

Though higher than in the past, Strick said he doesn't hear people complaining much about them.

"Higher gas prices is something we're getting used to."

Chico's lower prices than state averages has been attributed to the community's abundance of gas stations.

"I won't even try to guess prices. We just don't do that," said Dave Fogarty, spokesperson for Western States Petroleum Association in San Francisco.

But he noted the price of crude had come down about $9 a barrel.

Fogarty said there was good reason for the escalating gas prices in California, including the expectation of war, the phasing out of MTBE in California and retrofitting for the use of ethanol.

A labor strike in Venezuela, crippling the supply, also has had an impact, he said, as well as refinery maintenance.

Drivers everywhere in the United States are experiencing higher prices for gas, but California's circumstances made the higher prices climb more. Also adding to the cost drivers pay at the pump are California's gas taxes, which amount to about 50 cents a gallon.

"The future? No one knows. What we're watching on our television screens over the next few days will help determine the cost of crude oil," said Fogarty.

While oil wells may be burning, Strick said a quick strike against Iraq and Saddam could produce a faster drop in prices.

Neither man believed that Gov. Gray Davis' investigation into the state's gas prices would have an effect.

"There have been many investigations - about 25, with the most recent released on March 12 - that showed the gas marketplace is competitive and nothing unlawful is occurring," Fogarty said.

As far as lowest pump prices in Chico, Safeway club card holders probably enjoy the distinction.

Safeway club card holders probably enjoyed the lowest price in town at $2.029 a gallon for regular. Lines lengthened at the Mangrove Avenue gas station with drivers attracted to the card price of $2.029 and noncard price of $2.059.