Gasoline prices fall some, even out

<a href=www.vicksburgpost.com>More By Sam Knowlton

[3/25/03]Consumers may have noticed slightly lower or at least more stable gasoline prices recently, but a wholesaler and an economics professor see no relation to the war in Iraq.

After approaching record highs, prices have been continued near or above $1.60 a gallon.

“We haven’t had a price change in two or three weeks,” said Catina Freeman, manager of Mac’s Gas, 1920 Drummond St., where today’s price was $1.59. The last change was a 3-cent increase, she said.

A manager at Hill City’s Exxon Jubilee Store No. 114, Mission 66 at Clay Street, said the price there had been decreased a couple of days ago from $1.65 to its current $1.63.

The Gulf Coast average was $1.58.9, down 2.3 cents from the previous week but up 31.4 cents from a year ago, Department of Energy statistics show.

The retail-administration manager at local fuel wholesaler Hill City Oil, Benno Van Ryswyk, said the price his company pays for gas fluctuates daily.

“The last decrease we had was last week,” he said. “I think it’s going to go up again tonight.”

Wholesalers like Hill City, which provides gasoline to several Vicksburg retail stations, respond at different rates of speed to the price increases or decreases.

“I look across the street to my competitor and if he’s going down, I’ll go down,” Van Ryswyk said. “Within a day, day and a half, people come to about the same decisions. They’re economic decisions.”

Van Ryswyk said this morning that he had seen an overnight increase in the price asked by independent oil producers, who deliver the least-expensive gas to Vicksburg, of 3.65 cents per gallon, and an increase of 1.5 cents per gallon in gas from name-brand producers.

Prices charged by the oil companies are strongly influenced by a futures market at the Chicago Board of Trade, he said, adding that trouble spots in at least two other places in the world besides the war in Iraq may have contributed to the recent relatively high U.S. gas prices. The additional factors he mentioned are decreased production in Nigeria and Venezuela.

“Most of the problem is related to problems in the refining sector,” said Professor William Shughart, the Hearon Professor of Economics at the University of Mississippi, adding that American now has less oil-refining capacity than it had in 1970.

“That reduction, combined with growth in demand and balkanization in domestic gas markets caused by variations in environmental regulations from state to state, have been major culprits in the most recent spike” in gas prices,” he said. “As well as an interruption in supply from Venezuela,” which has been experiencing domestic strife in recent months.

The Organization of the Petroleum Exporting Countries has pledged to step up production of oil from Saudi Arabia, he said.

“Even though Iraq is the location of the second-largest known crude-oil deposits, it has been a minor player in world markets because of the embargo, which only the French have violated,” Shughart said.

For gasoline consumers, the end of the winter heating-oil season may be good news, Shughart said.

“A day or two ago we saw a fairly significant decline in the world price of crude oil,” he said, adding that as refineries shift capacity from the production of heating oil to that of gasoline, “that should lead to declining prices at the pump.”3