www.twincities.com Posted on Tue, Mar. 18, 2003
BY DAVID HANNERS Pioneer Press

Service stations in the Twin Cities had about a 35-cent spread between high and low prices Monday as the country readied for a U.S. invasion of Iraq.

Put another way, if you drove a Hummer, it would cost you $48 to fill that 32-gallon gas tank with $1.50-per-gallon gas at the Marathon station at 26th and Hennepin in Minneapolis. But you would've paid $59 to fill up at the Mobil at 45th and University Avenue N.E., in Minneapolis, where gas was $1.85 per gallon, according to prices listed at www.twincitiesgasprices.com.

Then again, "If you can afford a Hummer, you can afford gas," said Dawn Duffy, a spokeswoman for the AAA office in Minneapolis.

A AA and state officials said there should be no shortage of gasoline in the Twin Cities if the country goes to war, but that prices will remain high. AAA has been cautioning motorists from immediately filling up once war appears imminent.

Such "panic buying," as they call it, can drive up prices.

"It's ugly, isn't it?" said Duffy. "Last year, nobody talked about gas prices. From April to November, we were around $1.40, $1.45. Last fall, we started worrying about Iraq, and last December we started worrying about Venezuela. But gas prices didn't start going out of control until the first week of February, when President Bush made his speech to the nation and said that things were going to be happening in a matter of weeks, not a matter of months. I don't know if the conflict ball was rolling, but the gas price ball was rolling fast."

According to figures compiled by AAA, the price of a gallon of unleaded self-serve regular in Minnesota currently averaged about $1.68 Monday, lower than the national average of $1.72.

But just to show how those prices can fluctuate, they were roughly equal ($1.63 a gallon nationally, and a penny higher in Minnesota) a month ago. Go back a year and the average Minnesota price of $1.31 per gallon was 6 cents higher than the national average.

Gasoline prices can fluctuate for a variety of reasons: rumors of war, labor strife in major world oil supplier Venezuela, refinery fires or even the presence of heavy fog in the Houston Ship Channel. But stocks of crude oil and refined petroleum products in Minnesota are relatively stable at present, said Jeff Haase, an engineer who monitors petroleum supplies for the Minnesota Department of Commerce.

"With motor gasoline, we're standing at about 1.88 million barrels (of stocks) and that's pretty much average for this time of year," said Haase. "We're entering into the 'shoulder' season, where refineries are going to be switching over to making more motor gasoline for the driving months of summer. There's really no cause for concern with the stocks the way they are right now."

The nation is divided into five petroleum districts. The district that includes Minnesota and 13 other Midwestern states imports the bulk of its foreign oil from Canada. Last December, for example, the district imported 43.7 million barrels of oil, and two-thirds of that oil came from Canada.

Refineries in the Midwest get about 13 percent of their crude oil from the Persian Gulf. Most of that is from Saudi Arabia, but Iraqi oil accounts for over 18 percent of the oil imported to the United States from that region, according to statistics from the U.S. Department of Energy's Energy Information Administration.

All told, about 2.5 percent of the gas a Hummer owner pumps into his vehicle — which gets about 8 to 10 mpg — was refined from Iraqi oil.

David Hanners can be reached at dhanners@pioneerpress.com or (651) 228-5551.

seattlepi.nwsource.com Tuesday, March 18, 2003 SEATTLE POST-INTELLIGENCER STAFF AND NEWS SERVICES

Washington state has the sixth-highest gasoline prices in the country on a day when the nation's average price of regular gas was at its highest in history.

The average price of regular gas was $1.728 a gallon, the Energy Department said. AAA, which tracks thousands of stations across the country, also saw a national record.

Washington's average was $1.862 a gallon for regular. Only California, Hawaii, Nevada, Oregon and Arizona had higher average gas prices, according to the automobile association.

In the Puget Sound region, a gallon of regular gas was selling for an average of $1.897 yesterday, topping the state. That compares with $1.270 a year ago.

Gasoline prices have increased as crude oil inventories have dropped to their lowest levels in nearly three decades, drawn down by a strike in Venezuela that curtailed exports and boosted prices. The possibility of a further supply disruption from a war in Iraq has also raised crude oil and gasoline prices.

The previous high in both national surveys came in May 2001, amid low supplies of cleaner-burning reformulated gasoline in many urban areas and a spate of refinery disruptions. Prices usually peak nationally in May and June when demand rises as the weather warms.

The average nationwide price for regular-grade gasoline rose 1.6 cents in the week ended yesterday, the government data showed. It has climbed for 13 of the past 14 weeks and added 34 percent from $1.288 a year ago. The Energy Department surveys about 900 gas stations.

AAA, which updates its prices daily with data from the previous business day's credit card transactions at more than 60,000 gasoline stations, said prices reached $1.719 a gallon

www.chronwatch.com

Posted by the ChronWatch Founder, Jim Sparkman Tuesday, March 18, 2003

   What should we make of current gasoline prices?  We have a governor who assumes every energy problem is the result of gouging by greedy oil companies.  And he says so repeatedly, just in case California's reputation as the most anti-business state begins to slip.  He admits he has no proof, but says it anyway.  What a stateman!  Destroying California's business reputation is one job he has done well.

   On the other hand, the Chronicle doesn't have a single soul on the staff who can add anything of any value to our understanding. The Chron ranks are filled with journalists who don't know anything about anything.  As the song in the GM commercial goes, ''Nothing from nothing is nothing.''  As a result, they are forced to write article after article by quoting ''experts say'' and ''critics say.'' By definition, that's the only contribution they can make.  Of course, they throw in their bias in imitation of the governor.

   So, we have to go elsewhere for real information. This article is from the Wall Street Journal, written by Alexei Barrionuevo.

Oil prices are sliding as more crude moves toward a thirsty U.S. market, but gasoline prices aren't expected to follow them down anytime soon.

The reason: tight crude-oil supplies and production problems, particularly on the West Coast.

In California, where prices now average $2.08 a gallon, gasoline supply continues to be dogged by refinery-maintenance issues and complications surrounding the production of a new ethanol-gasoline blend.

Nationally, gasoline prices are expected to reach highs, before adjusting for inflation, when the latest survey comes out Monday. They most recently averaged $1.71 a gallon of regular, just below the previous record. A prolonged oil workers' strike in Venezuela this year and fears about the impact of a possible U.S. invasion of Iraq have contributed to the bulk of the price run-up.

Inventories have dropped dangerously low in some parts of the country and will be hard to replenish quickly. The crude on the way from the Middle East won't help inventories for a month or more, and weeks more will pass before the oil is refined into gasoline and transported to service stations. The Energy Information Administration, an arm of the Department of Energy, predicts that pump prices will peak at $1.76 this year.

In California, the mix of problems are ''adding up,'' said Joanne Shore, a senior analyst for the Energy Information Administration. Refiners in the state are struggling to comply with new rules requiring them to switch to a new fuel mix that uses corn-based ethanol rather than MTBE, a common gasoline additive produced in refineries that has been linked to some environmental problems. While refiners produce MTBE, or methyl tertiary butyl ether, and blend it into gasoline early on, ethanol must be added at the end of the process. And because less ethanol is required per gallon than MTBE, refiners are producing, overall, less volume.

''The potential for spikes today are greater today because we are starting the season with lower inventories and the voluntary switch is removing volume from the market,'' Mr. Goldstein said.

During a protracted political battle over ethanol use, California's Energy Commission and outside consultants warned of potential complications with the transition. But refiners comprising about 80% of California's gasoline production voluntarily decided last year to switch to ethanol one year ahead of a federally mandated changeover, believing they could make the transition smoothly.

California also is short of refinery production. Some 10% of the state's production is sidelined for annual maintenance work. BP's Carson refinery, which supplies about 25% of Los Angeles's gasoline, is a week late in returning from 50 days of planned maintenance. A BP spokeswoman said the long-planned maintenance work cost almost $100 million. ''We are working 24 hours a day to get the plant back up because we realize its importance to the market,'' the spokeswoman said.

The problems are producing some unseen price discrepancies. The average pump price in San Francisco has risen to $2.27, the highest level in the country, according to the American Automobile Association.

Write to Alexei Barrionuevo at alexei.barrionuevo@wsj.com

www.bday.co.za

WASHINGTON - US petrol prices at the pump shot to a record high this month, forcing consumers to feel the financial pain of the threatened war in Iraq, a motorists' association says. Prices leapt to an average of $1.719 a gallon of regular petrol (45.4 cents a litre) from $1.63 a month earlier, the American Automobile Association said.

It eclipsed the previous record of $1.718 a gallon set May 15, 2001, the AAA said.

"Motorists should also be prepared to resist the urge to immediately buy gasoline following a possible declaration of war on Iraq, or the commission of a terrorist act," AAA said in a statement.

"This is because the panic buying of gasoline and the formation of gas lines have the potential of causing needless fuel shortages in local areas," it warned.

AAA spokesman Geoff Sundstrom said oil prices rose as a possible war approached in Iraq, much of the US had an icy winter, and Venezuela's oil industry was temporarily hit by a strike.

Many US states also require gasoline stations to convert to a costlier, lower emission gasoline when warmer weather arrives, pushing up prices around this time of year, he said.

Petrol demand, despite the price increase, remained strong, Sundstrom said.

"The American economy is largely geared towards the operation of private vehicles rather than the use of public transport, so we say that gasoline (petrol) demand is really inelastic," he added.

AFP

seattle.bizjournals.com From the March 14, 2003 print edition Steve Wilhelm Staff Writer

As fuel prices climb, local transportation companies are trying with varying success to pass the increased costs on to customers.

Both fleet managers and independent operators such as taxi drivers say the increased fuel prices are compounding their problems from the slow economy. Their margins are being squeezed between higher costs and struggling customers who are unwilling to pay more.

"I don't know how much the customer is going to take," said Ed Vanderpol, who is president of Seattle-based trucking company Oak Harbor Freight Lines as well as president of the Washington Trucking Association. His company, with a fleet of 450 trucks, is tacking on to all bills a fuel surcharge of 7 percent, the highest he's ever charged.

"I think there are some carriers out there that are hurting," Vanderpol said. Coming on top of rising workers compensation and liability insurance payments, he said, the higher fuel prices are "killing us."

This week, statewide regular gasoline prices were up 57 percent from a year ago, to an average $1.85 a gallon, while diesel prices were up 54 percent to $2 a gallon, according to the American Automobile Association. The increase results from reduced production in Venezuela, anxiety about a war in Iraq, and stockpiling by oil companies to buttress low inventories. .

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Unlike unregulated cargo carriers such as Oak Harbor Freight, some transportation companies cannot pass on their costs to the customer. Many passenger-carrying companies must have their rates approved by regulators, and any increases are lagging behind the fast-rising fuel costs.

Seattle's 1,500 taxi drivers, who haven't seen a basic rate change since the early '90s, are perhaps the hardest hit. Now drivers are paying $5 to $10 a day extra for gasoline at a time when the recession has deeply slowed their business, they're struggling to make ends meet, and they want to add a fuel surcharge to the basic $1.80 per mile that passenger pay.

One downtown Seattle driver, who asked to be identified only as Hassan, said that some days he only gets four clients, instead of a dozen back when the dot-com economy was booming. He rents a taxi for $50 a day and now must spend another $25 for gas, so some days he only clears $20, or even loses money.

Driver Tom Stull, who drives "nearly every day," said he'd welcome a surcharge. "That would help pay for the gas, of course," he said.

Terry Davis, a driver who is also acting director of the Cab Drivers' Alliance of King County, said his organization will be asking the city to swiftly enact a per-trip surcharge of 50 cents to 60 cents.

"The drivers are hurting. We are independent contractors, and we just cannot raise rates like everybody else can," he said.

Airporter companies, which run vans to Seattle-Tacoma International Airport, are also struggling with the rapid gas-price increases.

John Rowley, vice president and general manager of Seattle-based Shuttle Express Inc., said the Washington Utilities and Transportation Commission on Feb. 25 granted his company a 50-cents-a-person surcharge starting March 1. But additional fuel price increases since then have forced his company to go back for an upward adjustment.

Shuttle Express operates a fleet of 100 Dodge vans and 20 Lincoln Town Cars, consuming 60,000 gallons of fuel a month, Rowley said. He estimated the increased fuel prices are costing his company $20,000 a month.

"We hope the UTC will agree we should be recouping all of that difference," he said.

Unregulated carriers, while free to adjust surcharges as they wish, are constrained by the intense competition for cost-conscious customers.

On March 3 Seattle-based Airborne Inc. added a 5.1 percent fuel surcharge to its express shipments, while Alaska Air Group Inc. has added a $10 per-passenger surcharge for flights not on sale.

Federal Way-based Totem Ocean Trailer Express Inc., which moves ocean cargo between Tacoma and Alaska, in early February filed to increase an existing fuel surcharge to 6 percent of the ocean freight rate, from 5 percent.

Totem's vice president of sales and operations Jeff Keck said he's carefully watching the prices being charged by competing barge and truck services.

Other carriers are being squeezed between opposing forces.

Harbor Freight Lines Inc. on March 1 enacted a 6 percent fuel surcharge to help cover the increased costs of the owner-operators who drive company trailers to Seattle's waterfront to pick up ocean containers. The problem, said operations manager Richard Hill, is that the ocean carriers aren't all willing to pay his company a surcharge to pass along the expense.

"Some steamship lines are offering 5.5 percent, some are offering 2 percent or nothing," Hill Said. The discrepancy is eroding Harbor Freight's margins, but Hill feels he must fully compensate his drivers or risk losing them.

"We do have a bunch of good guys," he said. "The margins are so small for them and for us anyway."

Clipper Navigation Inc. already has added a $1 fuel surcharge each way for the unregulated route between Seattle and Victoria, B.C., and general manager Darrell Bryan plans to double that March 15.

With the company's diesel-driven vessels burning 500 gallons of fuel an hour, and its turbine-driven Clipper IV burning 1,600 gallons an hour, Bryan estimated the increased fuel prices will boost expenses by $700,000 this year. He's already spent more than that on new government-required security-related equipment and infrastructure.

"With increased security costs, added onto increased fuel costs, that will add a lot of challenges for small boat operators," he said.

Reach Steve Wilhelm at 206-447-8505 ext. 113 or swilhelm@bizjournals.com.