Story last updated at 5:02 a.m. Saturday, March 22, 2003 morningsun.net By Joe Noga Morning Sun Staff Writer

Gasoline is important to America. According to the Motor and Equipment Manufacturers Association, personal vehicles gulp up 115 billion gallons of gas and diesel fuel each year. And, Americans drive more than 2.6 trillion miles each year, enough for 14,000 round trips to the sun.

But, gas prices have always been a sore spot for consumers. Over a period of a month, the cost of a gallon of gas can fluctuate by as much as 15 cents or more. Some believed the war in Iraq would have a negative effect on gas prices for consumers, but, surprisingly, prices have actually gone down locally since the war began.

On Friday afternoon, the average price of regular unleaded gasoline was $1.59 in Pittsburg, down about three cents since Monday.

Mike Horton, owner of Horton's Pizza Plus, which has locations in Arma and at 1601 E. Fourth St. in Pittsburg, said he has no idea why gas prices are going down.

"I was just as shocked as anybody," he said. "We don't really know any more about it than anybody, we just happen to sell it. We were under the same impression that it was going to keep edging up a little more but then it went down a few cents this week."

Kristie Shepard, manager of Short Stop, 4002 N. Broadway, said she wasn't expecting prices to go down either.

"We are owned by a corporation. Our prices are set by what our corporation says," Shepard said. "I pretty much thought they were going to go up."

Shepard said customers were just as confused as she was when they saw the prices inching down.

"I think most of them expected prices to go up," she said.

Horton said he did not know whether or not the downward trend will continue, but added he sure hopes it does.

"I really don't know if they'll keep going down," he said. "Your guess is as good as mine. I would like to see the trend continue. People are happier when it is going down instead of going up. There is no way of knowing."

Horton said the price of gasoline fluctuates throughout the day but he tries not to get to involved in studying what prices will do.

"Whenever we get to a certain point in gallons we buy more fuel. I don't speculate. I don't look to try and buy it when it is less. When I get down to a certain point I buy fuel and whatever it is, it is. I wish there was some magical thing I could do but it doesn't work like that. I hope it keeps going down but I wouldn't count on it," Horton said.

Dan Shapiro, director of retail operations with Crescent Oil, sells gasoline to many local convenience stores.

Although a 30-year veteran in the business, Shapiro said he is no expert. However, he does understand why gas price fluctuate so much from week to week.

"We buy fuel on want is called a terminal rack price. Terminals buy gas at spot market prices. It's almost like the stock market in a way because the future prices are very important to the spot and rack prices," Shapiro said. "So, for instance, if there is a fear of something happening, the futures prices will go up, followed by the spot market, followed by the rack. The rack price, which is the price you pay at the pump ultimately, could go up on the fear of something happening, not on it actually happening."

Shapiro said that things like an oil strike in Venezuela and a refinery blowing up on the east coast will effect gas prices because supply is diminished.

However, he said events like this also effect the futures market because the futures market gets worried something might happen.

Shapiro said there are additional problems, but they don't always include how much oil is coming out of the ground.

"It isn't so much that there is a lack of oil coming out of the ground but that we don't have enough refining capacity," he said. "The refineries are operating at 95 percent, I'm told. That would be like running your engine at 95 percent for a very long time. So, any time there is a hiccup such as a fire at a refinery, it generates these ripples that go throughout the entire system."

But does this explain why gas can go from $1.55 to $1.65 overnight? Sort of, Shapiro said.

He explained that what typically happens is that the price gas stations pay for gas creeps up over time. Once the price reaches a certain point, one station will lead the way and raise the price, then others follow suit.

"You and all your competition are looking at each other, waiting for who will be the first guy to go up and who will follow," he said. "Everybody is trying to get gallons from each other."

Shapiro said that the opposite is also true.

"Let's say they are sitting at $1.55 and the rack price goes down to $1.47. Then the rack price goes down to $1.43 and all of a sudden they are making 12 cents per gallon, which makes up for the three cents per gallon they made last week. But then, because there is such high competition, someone will lead down," he said.

Shapiro said that the worst thing to happen in the gasoline industry are the big price signs which are displayed out front of gas stations.

"Think about it, do supermarkets put up giant milk price signs?" he said. "If you did then the price of milk would be as sensitive as fuel and people would drive another mile for a few pennies. If you can get the perception of being priced, then you have a leg up on the competition."

miva.jacksonsun.com By DENNIS SEID dseid@jacksonsun.com Mar 22 2003

Christy Powers drives roughly 100 miles daily between her home in Milan and her job in Lexington. So when it's time to put gas in her Dodge Stratus, she's looking for the best deal she can find.

Most of the time, she purchases her regular unleaded fuel in Lexington, which can be 6 to 8 cents cheaper a gallon than her hometown. With the war in Iraq getting under way, she fears those savings might soon disappear.

"I think we'll have to worry about a shortage, and everything will go up," she said.

No long lines of customers have flooded area gas stations.

In fact, it's pretty much business as usual, said Richard Jacobs. His company, River Oil Co., distributes gas to stations around West Tennessee, including his own Phillips 66 stations.

And when he went to his office Thursday morning, he was hit with another pleasant surprise.

"My jaw nearly hit the floor," Jacobs said. "We actually got a price decrease. It wasn't big, about 1 cents, but it was still a drop."

The average price for regular unleaded gas Friday in the United States was $1.70, while the average in Tennessee was $1.62, according to the Automobile Association of America.

Jacobs thinks the start of the war removed a great deal of uncertainty, and helped stabilize the market - if only briefly. The markets become volatile when people aren't sure what is happening.

Now that war has officially begun, everybody can relax a little.

"Strange, isn't it?" he replied. But Jacobs also warned that "we'll still see some volatility."

Janice Mealer drives a 2001 Dodge Ram - a six-cylinder, she emphasized.

"The guys driving the V-8s are really hurting," she said. "I put $20 worth of gas in my truck yesterday, and it didn't even fill it halfway."

She, too, thinks gas prices will creep upward, much like they have done in recent weeks.

"If it does, I'm going to start walking to work," she said.

Ashley Woods knows her pain. Her husband drives a 1994 Chevy Silverado, and $50 a week on gas is barely enough to keep it running. Ashley drives a Pontiac Sunbird, which should get better mileage.

"It should, but I drive like a bat out of hell," she said.

The Woodses live on a farm outside of Lexington, and so they have to buy gas for the tractors and 4-wheelers. It all adds up rather quickly.

"It can get pretty ridiculous," she said.

As for the Iraqi war forcing gas prices to go up, she has no doubt that will happen.

"But it will eventually get better and go back down," she said. "I hope."

Venezuela, after going through an oil workers' strike a couple months ago, is revving its oil production.

And OPEC (Organization of Petroleum Exporting Countries) has promised to take care of any supply shortages caused by the Iraqi war.

Jacobs also said President Bush would likely open the nation's Strategic Petroleum Reserves if the situation reached a point that fuel prices kept climbing. That would provide approximately 6-8 months worth of oil and gas.

"If necessary, he'll open the spigot," Jacobs said

• Dennis Seid, dseid@jacksonsun.com, 425-9644

www.lsj.com Published 3/22/2003 By Chris Andrews Lansing State Journal

On the Web

• www.michigan.gov, a Web site tracking gasoline prices, is expected to be available within the next two weeks.

State officials announced plans Friday for a new

Web site enabling motorists to track gasoline prices in their communities.

State officials said that gasoline prices - which dropped Friday after sharp increases in recent weeks - remain volatile now that the war with Iraq is under way.

"It really depends on events and how things go. Tomorrow, something very bad could happen, and we could see crude oil prices jump up," said Jeffrey Pillon, manager of energy data and security for the Michigan Public Service Commission. "Currently things seem to be going well."

Gasoline prices increased dramatically over the past several months as the nation edged closer to war. The average price of gasoline statewide on Monday was $1.77 a gallon for unleaded self-serve, compared with $1.35 a gallon in December.

Prices at some stations on Friday were as low as $1.61.

There are other positive signs on the horizon. Saudi Arabia and Venezuela have increased production, and the U.S. strategic reserves offer a supply if needed.

"The prices were significantly influenced because of the psychological uncertainty that was driving the market thinking about the prospect of war," Pillon said. "When that uncertainty was eliminated, prices began to come back down."

State officials say there have been no signs of the type of gas-gouging that occurred after the terrorist attacks on Sept. 11, 2001.

The new Web site, www.michigan.gov/gasprices, will make use of a database created from credit card payments made at gasoline stations around the state, said state Agriculture Director Dan Wyant. The site is expected to be operating within two weeks.

The database collection will cost the state about $16,000.

The site will allow motorists to track the range of gasoline prices in their communities either by city or by ZIP code. It will not give the prices at individual stations.

Last year, Michigan residents purchased 4.8 billion gallons of gasoline.

State officials said there are no signs that motorists have been driving less because of higher gasoline prices.

Earlier this week, Attorney General Mike Cox warned Michigan gas stations of the harsh penalties associated with gouging consumers during a time of war.

After the Sept. 11 terrorist attacks, the Attorney General's Office charged more than 40 retailers with grossly excessive pricing. The cases were settled with stations refunding consumers who had been overcharged.

Contact Chris Andrews at 377-1054 or candrews@lsj.com

www.pensacolanewsjournal.com PUBLISHED SATURDAY, MARCH 22, 2003 Derek Pivnick

The start of war in Iraq might mark the start of lower gasoline prices.

While prices remain at or near all-time highs, the price for a gallon of fuel could drop as much as 40 cents from current levels in the next five or six months, said Jim Smith, president and CEO of the Florida Petroleum Marketers Association in Tallahassee.

"The problem, and the reason the price of crude oil went up so far and so fast, was because it was unclear what was going to happen," Smith said.

Now that the war is under way, rumors have less impact on oil prices, he said.

The same thing happened in 1991 during the first Gulf War.

"The minute hostilities began, crude prices fell, and it's the same thing that's happening now," Smith said.

AAA Auto Club and petroleum industry representatives issued a joint statement Thursday to assure American consumers that fuel supplies won't be interrupted, and inventories of gasoline and diesel are adequate to meet normal demand.

"There is enough fuel around. We won't have any shortages," said Yoli Buss, director of traffic safety for AAA Auto Club South in Tampa.

It's too early to tell whether war will have any impact on the desire for Americans to travel this summer, when fuel demand typically increases, said Mable Brown, assistant manager at the Pensacola office of AAA Auto Club South.

Brown said her office received no cancellations of travel plans after the U.S.-led assault began.

Other factors led to the recent rise in gasoline prices, such as a strike in Venezuela, which reduced crude oil production.

"I prefer to see long periods of declining prices," said Richard Puckett, president of Puckett Oil Co. in Pensacola, a petroleum marketer. When prices increase, it pressures profit margins, Puckett said.

The highest recorded average price for gasoline in the Pensacola area was Tuesday. A gallon of regular unleaded was $1.688, according to the auto club's daily fuel gauge report. Friday's prices were fractionally lower, with a gallon of regular unleaded costing $1.683.

Sunday, March 23 By Ted Jackson, Palm Beach Post Staff Writer Saturday, March 22, 2003

Oil prices have fallen sharply since the start of the Iraq war, but don't expect record-high prices at the pump to drop anywhere near as fast. It won't stay there for long

Even though futures prices for wholesale gasoline have fallen in the last two days by about 40 percent, to 82 cents per gallon, and oil prices have tumbled 30 percent, to about $26.50 per barrel, energy market observers say prices are unlikely to remain low for very long.

"I expect oil will fall as low as $21 per barrel," said Alexander Levien, an oil trader at Ken Wolf Commodities in Boca Raton. "But it won't stay there for long."

Levien expects oil prices will soon be approaching $30 per barrel again, while the federal Energy Information Administration is forecasting an average price for oil this year of $32 a barrel, a 25 percent jump from 2002 that assumes no supply disruption from a war in Iraq.

"It would take between four weeks to eight weeks for these lower oil prices to start showing up at the pump anyway," said EIA analyst David Costello.

Gasoline prices in Palm Beach County hit a record high in February, several weeks before the average price for gasoline in Florida hit a similar record.

The current average price for gas in the county is $1.79 per gallon.

"The market is really focusing on the progress of the war right now," said Guy Gleichmann, senior energy trader at U.S. Investments in Miami. "Because the campaign seems to be proceeding smoothly, the big war premium that drove prices higher is now being squeezed out of the market."

There are several reasons why experts think the price of oil will go back up.

Oil inventories are at historic lows in the United States and it is unclear whether increased OPEC production will be enough to sustain the recent decrease in the price of oil.

Also, the effects of a prolonged strike in Venezuela are depriving the world market of about 500,000 barrels a day, while escalating violence in the oil-producing Niger River delta in Nigeria has cut production in that country by about 10 percent.

The oil markets were cheered by reports Friday that only seven wells had been set on fire in the key oil fields of southern Iraq.

Adm. Michael Boyce, chief of the British defense staff, confirmed Friday that oil fields in the south had been secured with minimal damage, according to Dow Jones.

Nevertheless, Iraqi oil exports have ground to a halt for the time being, depriving the world oil market of the country's 2 million barrels a day of production.

World oil consumption is 77 million barrels a day.

ted_jackson@pbpost.com