www.signonsandiego.com By Frank Green UNION-TRIBUNE STAFF WRITER March 18, 2003

San Diego County motorists could spend an extra $600 million or more on gasoline this year if fuel prices remain at record-high levels, according to estimates by local economists and consumer activists.

The potentially huge chunk of displaced cash could spark symptoms of stagflation by pushing up the cost of most consumer goods even as workers' earning power stagnates, as happened when oil prices spiked in the 1970s.

"Every 10-cent increase in fuel prices translates to roughly $5 million a month" transferred to refiners' coffers, said University of San Diego economist Alan Gin.

Gin generated the $600 million estimate based on gasoline sales and vehicle use in the area.

The average cost of a gallon of unleaded regular in the county jumped to $2.22 yesterday, up more than seven cents from a week ago, according to a survey of 550 local service stations by the Utility Consumers' Action Network.

Prices ranged yesterday from $2.09 a gallon at some Arco and Costco outlets to $3.79 a gallon at a Texaco station in El Cajon. Gas cost about $1.40 a gallon this time last year.

Nationwide, fuel prices rose to an all-time high of $1.72 on Friday, the American Automobile Association said.

Fears of a war in Iraq, among other factors, have caused crude oil inventories to drop and prices to soar. In California, prices have been pushed up even more as refiners switch to the new fuel additive ethanol.

A typical family in the county paid $1,349 for gas and oil last year, according to the Bureau of Labor Statistics. Thus, a 50 percent hike in fuel costs would mean an extra $674 deducted from the family budget.

"That's a very steep jump," said Kelly Cunningham, an economist at the San Diego Regional Chamber of Commerce. "Consumers have already been getting conservative about spending (because of the impending war against Iraq) and this is another damper."

Gin noted that the $600 million in possible additional fuel costs for the county this year is just a fraction of the area's $100 billion-plus economy.

It is also smaller than the $2 billion in higher bills paid by local ratepayers to electricity generators during the energy crisis of the last two years.

But critics of the oil industry note that $600 million would be enough to cover more than half of the San Diego City Schools system's $1.1 billion budget.

Some consumer activists said yesterday that Gin's estimate may be conservative and that local car owners could have to pay much more for gas if there is a prolonged war against Iraq.

The $600 million figure "seems low," said Charles Langley, the manager of UCAN's gasoline project.

UCAN said it has been inundated with calls and e-mails from members worried that their budgets will be stretched to the breaking point by spiraling fuel costs.

One member lamented that he may have to sell his truck or get a third job to pay his gas expenses.

"I get 12-15 miles a gallon," he wrote in an e-mail to the nonprofit organization. "That's about 13 to 18 cents a mile. I know public transportation is an option, but I like driving and don't want to lose it."

Gin said he expects the first casualties of higher fuel costs to be discretionary items – things like concert tickets and ice cream cones – as consumers spend more on a must-have commodity.

But the price spike will ultimately exert a ripple effect on the economy, as furniture, pizza and other goods cost more to be transported, Gin said.

Gasoline for April delivery rose 1.21 cents, or 1.2 percent, to $1.0525 a gallon in overnight electronic trading yesterday on the New York Mercantile Exchange.

Futures, which represent wholesale markets, dictate the direction of retail prices.

Gasoline futures are up 54 percent since November, having begun to rally in December with the start of the strike in Venezuela, which had been meeting 10 percent of U.S. oil needs.

They touched a 21-month high earlier this month.

Oil and gasoline futures rose yesterday on the expectation an invasion of Iraq could begin as soon as this week, after the United States and its allies said the United Nations has one day to break its deadlock over the use of force in the Persian Gulf, source of a quarter of the world's oil.

Some government officials are suspicious that the oil industry may also be manipulating the gas supply for profit.

Last week, Sen. Barbara Boxer, D-Calif., asked the General Accounting Office to look into allegations that oil companies are shutting down more refineries than usual this season with the possible intention of boosting prices.

Frank Green: (619) 293-1233; frank.green@uniontrib.com

www.buffalonews.com By MATT GLYNN News Business Reporter 3/18/2003

SHARON CANTILLON/Buffalo News The price of premium gasoline went over $2 a gallon at a Mobil station on Sheridan Drive and Millersport Highway in Amherst, where Tyson Behnke was filling his tank.

Call it a sign of the times: a gas station in Amherst is charging more than $2 for a gallon of premium gas. Many motorists around the region might still be filling up with the lowest-price grade of gas, which is averaging $1.77 in the area, according to a survey by the American Automobile Association.

But seeing premium gas cross the $2 mark is an attention-getting reminder that fuel prices are still rising. And some of the same factors blamed for the increase over the past few weeks - such as a looming war with Iraq - haven't gone away.

The owner of the Mobil station at Sheridan Drive and Millersport Highway referred questions about his gas prices to ExxonMobil officials.

Gas prices around the region - up 43 percent for each grade from a year ago - have some motorists fuming. But a spokesman for a convenience store group contends the owners of those stores aren't making much off fuel sales.

The typical profit margin on gasoline for those retailers nowadays is about 10 percent, before they cover expenses, said Jeff Lenard, a spokesman for the National Association of Convenience Stores.

A retailer who sells gas for $1.70 a gallon might buy it for $1.53, before taking out 1 to 2 percent for distribution costs, 2 to 3 percent for operating expenses and about 3 percent for credit card transaction fees, Lenard said.

"You're talking about a nickel or so a gallon of profit," he said.

In the past, the group has published brochures to hand out to convenience store customers, to explain the price hikes.

Lenard said some store owners make less on gasoline as the price goes up, if they eat some of the higher cost to stay competitive with rival stations. Some retailers try to make up the difference as wholesale prices begin to drop, he said.

Higher gas prices can also cut into a retailer's in-store sales, he said. A customer who used to spend $15 on gas and $5 on items in the store might now spend the entire $20 toward fuel, he said.

A host of factors - production problems in the West, oil prices forced up by the prospect of war, and a drop-off in imports from Venezuela - have been blamed for spurring the increases at the pump.

The price of crude oil has nearly doubled in the past 12 months, and the retailers have adjusted their prices to match that reality, said ExxonMobil spokesman Barry Wood.

Motorists in two states, California and Hawaii, are paying an average of more than $2 per gallon for the lowest-priced grade of gas, the AAA reports. And in seven states, motorists are spending an average of at least $2 per gallon on premium gas.

Robert Klein of Delta Sonic Car Wash Systems noted how much things have changed since early 2002.

"A year ago, I would have liked to stay under $1," he said. Now Delta Sonic's cheapest price is $1.66 for regular gas, though most of its stations sell it for $1.70. He estimates about 80 percent of Delta Sonic customers buy that grade.

Diesel fuel prices are also closing in on a record. Monday, diesel in the Buffalo Niagara region sold for an average of $2.02 per gallon, just four cents away from matching a record set two years ago, according to the AAA.

Motorists hunting for slightly lower fuel prices might catch a break on the New York State Thruway.

The Thruway Authority directs those gas stations to keep their prices close to what nearby competitors are charging, said Terry O'Brien, a Thruway spokesman. But since those prices are adjusted only weekly, they sometimes lag increases at competing stations.

Gasoline prices jumped another 1.6 cents this week to a national average of $1.728 a gallon, eclipsing the record high set in May 2001, the Energy Information Administration said Monday.

The EIA has predicted that prices would continue to soar at the pump because of tight supplies and high crude oil costs and reach an average of $1.76 cents a gallon next month.

Motorists probably will pay more than $1.70 cents a gallon through the summer driving season, the agency said.

In its weekly gasoline price tally, the EIA said Monday that regular gasoline prices ranged from a low of $1.61 a gallon along the Gulf Coast to a high of $2.145 a gallon in California, a jump of about 6 cents a gallon from a week ago in that part of the country.

Before this week, the highest average gasoline price recorded by the EIA was in May 2001, when motorists paid an average of $1.71 a gallon at pumps across the country.

e-mail: mglynn@buffnews.com

www.msnbc.com

NEW YORK, March 17 — U.S. gasoline prices are at all-time highs at the pumps due to thin supplies and fears that a war on Iraq could disrupt oil shipments from the Middle East, the American Automobile Association (AAA) said Monday.

    RETAIL GASOLINE PRICES are roughly 50 cents a gallon higher than they were a year ago, the AAA said.
   Energy experts say they expect prices to continue higher as spring weather tempts drivers back onto the roads and boosts demand during a time of war <ampersand/>#8212; a situation that could threaten a U.S. economic recovery by cutting discretionary spending.
   The American Petroleum Institute (API), which represents a number of big U.S. oil companies, has said that the surge in retail gasoline prices can be justified by a dramatic rise in the cost of crude oil as dealers fret over potential supply woes in the event of war.

Tight timeline for U.S. oil supplies But the price boom has again raised concern over potential price-gouging by retailers, with a group of Midwest lawmakers already calling for stringent monitoring of pump prices to ensure fair pricing. The average price of regular unleaded gasoline hit a record $1.719 a gallon March 15, with prices breaching the $2 mark in a number of major cities, according to the

      AAA<ampersand/>#8217;s latest survey of more than 60,000 self-serve stations.
   Crude oil futures prices were hovering around $35 a barrel Monday, up about 35 percent in four months as tensions rose between Washington and Baghdad and amid supply disruptions from OPEC-member Venezuela due to a national strike there.
   In a sign that an attack on Iraq is nearing, the United States, Britain and Spain Monday ended diplomatic efforts to win U.N. approval for an ultimatum to Iraq, paving the way for war. United Nations weapons inspectors were withdrawn.   

   President Bush will demand in a speech to the American people Monday night that President Saddam Hussein leave Iraq to avoid an attack, a White House spokesman said.   

     The AAA, the nation<ampersand/>#8217;s largest automobile and travel association, said in a statement last week that motorists should avoid <ampersand/>#8220;panic buying<ampersand/>#8221; in the event of a U.S. invasion of Iraq because it has <ampersand/>#8220;the potential of causing needless fuel shortages in local areas.<ampersand/>#8221;

www.presstelegram.com Article Last Updated: Monday, March 17, 2003 - 9:38:56 PM PST

With the energy crisis still fresh in our minds, it's no surprise that many Californians are eyeing the rise in gasoline prices now at about $2.14 a gallon and climbing with intense suspicion. If energy and natural gas companies could hoard supplies and reduce production to drive up retail prices, as was alleged, what's to stop gas companies from doing the same?

There is no evidence that current gas prices are the result the kind of market manipulation alleged in the energy crisis, but residents deserve to know for certain what is going on. The increase is costing consumers and businesses an extra $18 million a day, according to state estimates.

Gov. Gray Davis last week called on the Public Utilities Commission and the California Energy Commission to investigate the rise in gas prices. The current average retail price of $2.14 is an all-time high for California, though when adjusted for inflation is lower than record prices during the Iran hostage crisis.

The spikes could very well be explained by market forces some combination of war jitters, unrest in Venezuela, higher costs of adding Ethanol to gasoline instead of the more toxic MTBE (by federal mandate), and other factors.

Then again, as state Energy Commission spokesman Rob Schlichting told the Press- Telegram's Felix Sanchez, refinery production has increased by 8.2 percent since March 7. Why the production increase hasn't led to price stabilization or reduction should be a key question before the investigative commissions. They must also examine whether more refineries than normal were shut down for maintenance in February and early March, and why.

The state has examined price spikes at the gas pumps many times before, and usually determines that market forces are to blame. Such was the case in 1999, when Attorney General Bill Lockyer found that California's isolation from other gas-producing states left it vulnerable to price increases.

However, as Davis noted last week, gas prices tend to go down once the state starts looking into things. That's reason enough for investigators to get started.

www.nj.com Tuesday, March 18, 2003 By TOM HESTER JR.

As war in the Middle East looms, gasoline prices are nearing record highs in the Trenton region and prices are expected to continue increasing as the summer months approach.

Despite the accelerating pump prices - the national average is at a record high $1.719 - motorists are being urged to avoid rushing to fill the tank if war begins in Iraq. AAA Mid-Atlantic said a panic could cause needless fuel shortages.

"Engaging in panic-buying can get us into those gas lines that we had in the past," said Pam Maiolo, spokeswoman for AAA Mid-Atlantic. "There's no reason to think we're going to run into a gas shortage, but a sudden run on the pumps can create localized outages that don't have to happen if you consume gasoline as you normally do."

AAA's fuel gauge report, which surveys 60,000 gas stations daily, reported yesterday the national average for unleaded gasoline has hit the highest level recorded, at $1.719 per gallon, topping the previous high of $1.718 per gallon set on May 15, 2001.

The average New Jersey price for regular unleaded gasoline was $1.59 per gallon yesterday with the average price 2 cents higher in the Trenton area, Maiolo said. The highest average price recorded by AAA for regular unleaded in the Trenton area is $1.66 per gallon on June 7, 2001.

The Trenton area average for regular unleaded is nearly 49 cents more per gallon than a year ago, when it was $1.12 per gallon amid a slowdown in fuel consumption after the Sept. 11, 2001, terrorist attacks.

Diesel fuel also is more expensive, up to $1.83 per gallon in Trenton, compared to $1.20 a year ago, according to AAA, which said the Trenton record for diesel is $1.92 per gallon on Feb. 14, 2000.

In Pennsylvania, the average price for regular unleaded gasoline was $1.67 per gallon yesterday, according to AAA's survey.

The U.S. Energy Department predicted the national average for regular gas prices will jump to $1.76 per gallon in April, then hover at $1.70 per gallon through the summer. But Maiolo said it was difficult to guess what may happen to prices if war erupts.

"We're just in kind of a wait-and-see hold, as everyone else is," Maiolo said. "We know the price continues to go up. It's not going to get any better as time goes on."

Analysts said gas prices have soared in the last month because of war fears, high crude oil costs, heavy heating oil demand and tight crude oil inventories, spurred partly by labor turmoil in Venezuela that cut production.

The price of a benchmark crude, West Texas Intermediary, averaged $36 a barrel, a level not seen since October 1990, just before the start of the 1991 Gulf War, the Energy Department said.

Area residents were wary yesterday as they filled up at a Ewing gas station.

Hopewell Township resident Herb Hughes said he is spending more than $20 to fill his minivan and is expecting to pay higher fuel costs if the country goes to war against Iraq.

Adrienne Earle said she is spending about $18 to fill her tank, compared to the $15 she was spending a couple months ago. Earle, a student at The College of New Jersey, said gas prices are the least of her worries.

"I'm more concerned about going to war than the actual gas prices," she said.

Katlain Catrambone, who commutes from Philadelphia to Ewing, said the $10 she used to spend to fill her pickup truck now fills just half her tank, but her worse fear is also war.

"I don't mind if the gas costs more as long as we don't have a war," she said.

The national average, while a record high, still doesn't compare to 1981 if inflation is considered. Motorists would have paid $2.90 per gallon in March 1981, using today's dollar, the Energy Department said.

New Jersey prices remain cheaper than other parts of the nation, where average prices have soared to nearly $2 per gallon for regular gasoline. The average price on the West Coast is $1.93 per gallon, according to AAA and the Energy Department. In some West Coast locales, prices have topped more than $2 per gallon.

The Gulf Coast was the only region where prices have declined.

Maiolo credited New Jersey's gas tax with helping to keep Garden State gas prices in check. New Jersey's 10.5-cent gas tax ranks as third lowest in the nation, behind only Alaska and Alabama. New York's gas tax is 22 cents a gallon, while Pennsylvania's is 26 cents.

February and March are typically when gas is cheapest, with prices traditionally increasing in the summer as travel demand rises and cleaner fuel is required, Maiolo said.

The Energy Department's short-term forecast stated: "Even without additional disruptions to the world (oil) supply in the near term, prices are likely to remain on the high side and subject to substantial volatility through 2003."

Maiolo advised motorists to shop for the best price, try to cut fuel consumption and keep vehicles properly maintained to increase fuel efficiency.

While the government said price gouging was found after the Sept. 11, 2001, attacks in a few local markets, it doesn't expect gouging is a problem now. The Energy Department blamed the increased prices almost entirely on the high crude oil prices. Staff writer Eva Loayza contributed to this report.