Gas suppliers say price drop likely short-lived

Sheila Gardner and Pedro Morales <a href=www.rgj.com>RENO GAZETTE-JOURNAL 3/29/2003 12:18 am

Gas prices have dropped about 12 cents a gallon at some stations in northern Nevada in the past week, but suppliers said Friday they don’t expect the break in skyrocketing fuel costs to last.

“On the West Coast, one of the issues compounding the gas prices besides the war in Iraq and the repercussions from the Venezuela strike is the changeover at the refineries from winter fuel to summer fuel,” said Steve Yarborough, who is president of the Nevada Gasoline Retailers Association and owns Union 76 stations in Reno, Carson City and the Lake Tahoe area. “That is complete now and all the refineries are back up and operational.

“The supply side is starting to catch up with the demand,” he said “When you have an adequate supply, competitive forces come into play and drive the price back down.”

In Reno, some drivers at the Arco on the corner of Mill Street and Kietzke Lane said they were relieved to see the price drop to $1.91-a-gallon there, but expressed skepticism about whether prices would rise.

“I hope it’ll last. I don’t know though. I’m doubtful because it’s happened before. We think it’s going to go down and then it goes up,” said Fallon resident Frankie Galaz, 31, a housemother. “If it drops a penny, I think it’s better than nothing. Twenty cents is twenty cents.”

Yarborough said prices at his stations have dropped from $2.01 two weeks ago to $1.89 for regular. Comparable pump prices were reported in Carson City, Minden and Gardnerville.

He declined to predict what might happen to gas prices or what role the war in Iraq will play.

“I don’t think in this day and age you can count on a lot of anything,” he said. “We’ve got this issue and this tragedy of war going on in the hub of our oil exports, and I don’t know where our administration is going to stop.”

Sean Comey, a spokesman for the California State Automobile Association, said Friday fuel prices on the West Coast remained the nation’s highest from $2.27 in San Francisco to $2.03 average in Nevada. The national average Friday was $1.67 per gallon, down a penny from Thursday.

According to the automobile association, the cheapest gas in the United States is $1.50 a gallon in Missouri.

“We’re seeing a brief period of stability in prices. Whether that continues is uncertain,” Comey said. “It’s too early to say it if is a trend, but it’s the only encouraging news in retail gas prices consumers have had. Unfortunately, gas prices go up quickly like a rocket and drop like a feather.

“When gas gets over the $2 mark, people just get irate,” he said. “It’s real money. If current prices continue climbing, you are talking about $400 more a year in fuel costs for the average motorist.”

Peter Krueger, state executive director of the Nevada Petroleum Marketers and Convenience Store Association, said the price of crude oil had dropped more than $10 a barrel.

“The war jitters have been put aside a little bit. We’re doing OK,” he said. “There is a lot of uncertainty in the market. Gasoline is a commodity and people speculated before the war driving the prices up. Would the oil fields go up in smoke? How well would we do? Pretty much those fears are allayed.

“Can it go back up?” he asked. “Sure it could. But if I get out my big crystal ball, I think within 90 days, if all goes well, it could go back down to $1.65.”

He said members of the organization were not profiting from the high prices.

“There is no doubt in my mind. Our members are not gouging these prices,” Krueger said. “These men and women are making small margins and they’re gross margins at that. Nobody is getting wealthy.”

One motorist in Reno, Keith Lockhard, 56, a senior civil engineer for the city of Reno, said he believes the lower prices probably are a result of people driving less. He said dealers have had to adjust their prices accordingly for now, but expects prices to go up.

“My inclination is that it might drop a little and stay down for a while,” said Lockhard, a resident of an unincorporated area of Washoe County. “After some point in time it (gas) will be subject to other factors.”

Reno resident Casey Collins, 36, said people should hope for the best, but even he couldn’t look too far into the future.

“You gotta be optimistic, I think everybody is. I think they’re not going to get higher,” Collins, an auto mechanic, said. “But we’ll see when summer comes.”

Jeff Stone, 32, of Reno, was a little more pragmatic.

“I don’t think they’ll go as low as they once were,” Stone, a carpenter, said, referring to the prices of several years ago. “We’re seeing the beginning of high gas prices.”

“The time of the internal combustion engine is over. They need to find an alternative fuel source.”