Consumers may not see relief at pump until new inventory is purchased

<a href=www.dailytrojan.com>War may affect U.S. gasoline prices Abran Rubiner | Daily Trojan By ALLISON RUECKER Contributing Writer

As the war continues, the ever-changing oil prices have caught the attention of both traders and American consumers.

On Wednesday, CNN reported that the price of oil has increased 7 percent to $28.93 per barrel after hopes faded for a quick end to the war in Iraq. This was the largest one-day percentage rise since December 2001.

On Thursday, however, the Chicago Tribune reported that the oil prices rebounded and posted the first gain in eight trading sessions and the greatest daily advance in 15 months.

These recent fluctuations have been linked to Iraqi sabotages of oil wells.

The price of oil is dictated by supply and demand, not because of a shortage of it, said Iraj Ershaghi, professor of petroleum engineering.

"Consumption is definitely not going down," he said. "The United States alone uses 16 (million) to 17 million barrels of oil a day."

In 1979, a barrel of oil cost suppliers $30, but because of fear, the prices began to climb, Ershaghi said. This shows that besides the supply and demand concept, the phenomenon of oil prices is greatly affected by perception, he added.

The national average for regular gas remains at $1.71 per gallon. Gas prices will remain the same until buyers purchase crude oil at a lower wholesale price, Ershaghi said.

What people often do not understand is that once the price of oil is lowered, they may not see a change in gas prices for at least a couple of weeks, he said.

For every dollar that a barrel of oil's price is increased, the price of gasoline increases by a reported 2 cents a gallon.

Although the gas prices have skyrocketed in the recent months, some students believe that they should put this issue in perspective.

"The gas prices are very high, but in comparison to other countries, it's not that bad," said Aimee Nadeau, a senior majoring in music industry. "In Europe, it can be $6 or $7 a gallon, but I think that it more directly affects us because our public transportation is so limited."

California's gasoline prices have surpassed the $2 per gallon mark. Because of air pollution standards that must be met and taxes, California has the highest gasoline price of the 50 states, Ershaghi said.

Although the Middle East supplies 40 percent of the world's oil and is a major U.S. oil supplier, the United States has continually been depending on sources elsewhere.

The oil market instability can also be traced to the recent civil unrest in Nigeria and the oil industry strike in Venezuela.

Many students believe that the high gasoline prices come as a result of the war with Iraq.

"I think there's an indirect correlation between the war and the prices," said Benjamin Skidmore, a senior majoring in business administration. "I think that once we end the war with Iraq, the prices will fall."