www.pjstar.com March 5, 2003 By OMAR SOFRADZIJA of the Journal Star

PEORIA - Skyrocketing gasoline and natural gas prices have U.S. Rep. Ray LaHood calling for a federal investigation to ensure the hikes are being driven by something other than the type of "profiteering on public fears" that was seen here on Sept. 11, 2001.

In a letter dated Tuesday to Federal Trade Commission Chairman Tim Muris, LaHood, a Peoria Republican, urged the FTC to "proactively address this matter," saying he was "particularly concerned about public perception" about the reason for sharp price spikes.

"I'm really distressed about the high price of gasoline," LaHood said in a phone interview. "I want to make sure that if gas prices are going up, it's because of things we have no control over, not that some of these gas companies are out to take advantage of a situation."

LaHood did not say price-gouging was afoot; rather, he wanted scrutiny to guarantee that it isn't and won't be. "I want the public to know somebody is riding herd on this situation."

In calling for an inquiry, LaHood joins a growing list of federal legislators and state attorneys general who in recent weeks have asked for FTC action. And he echoes an earlier call by the AAA-Chicago Motor Club for service stations statewide to show restraint and avoid "panic pricing."

On Tuesday, the average cost of regular-grade gasoline in the Peoria area was $1.73 per gallon, a record high for this time of year that is up 16 cents from one month ago and 48 cents from one year earlier, according to AAA.

That mirrored major per-gallon price increases in Illinois ($1.72, up 53 cents from one year earlier) and nationwide ($1.68, up 54 cents), according to AAA.

Low crude oil reserves, speculation of a possible war with Iraq and political instability in Venezuela - a major producer of U.S.-bound crude - have been blamed for much of the cost increases in both gasoline and natural gas.

"Natural gas is the primary source of energy for residential heating in Illinois, and I am concerned that manipulation of prices could severely impact my constituents, especially the elderly, many of whom live on fixed incomes and cannot afford to pay artificially high heating costs," LaHood's letter said.

The FTC did not immediately return a call seeking comment on LaHood's request.

LaHood's letter cites Sept. 11, 2001, as a worst-case scenario for local gas pricing, when "a few bad apples profiteering on public fears" raised their prices more than twofold.

On that day, several Casey's stations in west-central Illinois which started the day in the $1.70 range sold gas at $4 or more per gallon in what the stations later admitted were unjustified and panic-induced hikes.

That admission came as part of a settlement with then-Illinois Attorney General Jim Ryan, who sued the stations for price-gouging.

The office of current Illinois Attorney General Lisa Madigan - who was elected to office last fall - is keeping an eye on Illinois pump prices, but believes the current market situation would be best reviewed by the FTC.

"We would encourage the FTC to look into this," said Madigan's press secretary, Melissa Merz.

"We are monitoring prices statewide and keeping track of it," she said. "We see it's a very volatile market right now. Price volatility does not necessarily mean unlawful conduct."

"However, we understand why people are concerned, and should the attorney general determine gas prices are violating consumer fraud laws, she will act appropriately," Merz said.

LaHood said people in his district who believe they're seeing price-gouging or price-fixing can call his office to complain.

"If the public believes there is some kind of activity where gasoline station owners or oil companies are trying to really increase prices to take advantage of the situation, they ought to report it to my office," he said. "People have been calling" to complain already.

www.norwichbulletin.com Wednesday, March 5, 2003 By BRIAN LYMAN Norwich Bulletin

NORWICH -- Ken Messier used to quote oil prices to customers several days before delivery. But with temperatures so low this winter and oil prices rising so quickly, he now waits until the night before delivery.

"The worst is: The elderly are getting slammed," said Messier, co-owner of Family Discount Oil in Taftville which services 5,000 customers in eastern Connecticut. "They can't afford this."

The price of home heating oil has jumped 10-11 cents per gallon since last Friday.

At Family Discount, it's gone from $1.649 per gallon to $1.759; at Viking Fuel in Oakdale, from $1.649 to $1.749; at Brodeur's Oil Service in Norwich, from $1.799 to $1.849.

Most blame continuing jitters about war in Iraq and a general strike in Venezuela aimed at ousting President Hugo Chavez. A month ago, the Norwich Bulletin reported on a spike caused when the U.S. government bought up all jet-fuel surpluses.

"We would say Venezuela is more important than Iraq at this moment," Steven Guveyan, executive director of the Connecticut Petroleum Council said. "It provides roughly 13 percent of U.S. imports, and the Northeast is hit particularly hard; more than that percentage is true in the Northeast. A lot of that is home heating oil."

The colder-than-usual weather this winter has led some people in the state to exhaust oil bought at fixed prices last year.

"Everyone understands this has been a really cold winter," John Mengacci, undersecretary for strategic management in the state Office of Policy and Management said. "Most of the folks who had locked in volumes against contract have to buy in a spot market, which is why you see the prices moving."

Gasoline prices in the state also have gone up, though not as dramatically as heating oil; the average price of gasoline in Connecticut Tuesday was $1.75 a gallon, up 15 cents from last month. Gasoline cost $1.20 per gallon this time last year.

Venezuela is beginning to produce some oil again, meaning war clouds are playing a larger role in determining prices.

"Usually, when military action starts is when the price takes off like a rocket," Guveyan said. "If it's short, and goes according to plan, the prices will go down quickly. Whether that happens or not, I don't know."

The course of war also makes it difficult to forecast summer prices, including whether gasoline prices shoot above $2 this summer. For now, Family Discount is trying to keep up with the demand.

"We've been at capacity every day," Messier said. "Every single day. The oil prices are sky high, but you still have to heat the house."

bmlyman@norwich.gannett.com

www.zwire.com STEVE WHITWORTH, The Telegraph March 05, 2003

Gasoline prices got fatter on Fat Tuesday, jumping by as much as 12 cents a gallon at many area stations. "I don’t know what’s causing that to occur," said Mike Right, veteran analyst with the AAA Auto Club of Missouri. When told about the 12-cent increases reported Tuesday in the River Bend, Right said he had received similar reports from the Missouri side of the St. Louis metropolitan area. "Up until this morning, we had seen a fairly consistent -- although modest -- decrease almost on a daily basis in St. Louis, beginning Feb. 14, when we saw gas prices hit $1.70 a gallon," Right said. "As of this morning, prices had come down to $1.55 per gallon, a 15-cent per-gallon drop, with only one day showing an increase during that period. I guess that was short-lived." Higher prices were posted Tuesday at gas stations around Alton, including the QuikTrip in Godfrey, where the price went up by 12 cents per gallon for self-service, unleaded regular gasoline to $1.67. The increase was the same at the Piasa Pantry on Illinois Route 3 in Hartford, where the price started the day at $1.55 and ended at $1.67. The manager of the Piasa Pantry, who gave her name only as Vicki, said few customers had complained about the increase. "Everybody’s got their own views about it," she said. "The price has been up for so long, I think everybody is getting complacent about it." An employee at the Amoco station at 1660 East Broadway in Alton said it had raised prices by 5 cents a gallon Tuesday, also boosting its price for regular unleaded to $1.67 per gallon. On the Missouri side of the St. Louis metro area, the average price Monday for a gallon of self-service, regular unleaded gas, as shown by the Auto Club’s Daily Fuel Gauge Report, was $1.57, Right said. He said that price actually had fallen in Tuesday morning’s AAA survey to $1.55, but a survey later Tuesday of 15 area stations showed the prices going up as the day went on. "Of the 15 stations we track, one went up 12 cents a gallon," Right said. "There will be a majority of them that will go up by double digits, maybe 10 cents or 11 cents, or maybe by 8 cents. Sooner or later, the overall average is going to go north." Right noted that wholesale gasoline prices have increased recently. "Supplies are not what they should be," he said. "Crude oil prices are crazy, going up and down. Right now, they’re at $36 a barrel. "Wholesale gasoline is above $1 a gallon. Things are not good." Right noted oil supplies have been falling, with the labor crisis in Venezuela contributing to the decrease, as well as a cutback in production of 2 million barrels announced last year by the OPEC nations. "We’re seeing a continuing increase in demand for the product and a continuing decrease in availability," he said. "We can expect prices to continue to rise." The political situation in the Middle East, particularly the showdown between the United States and Iraq, also is having an effect on gas prices, Right said. "Analysts suggest that $5 to $10 of the cost of a barrel of oil currently is directly attributable to anxiety over what’s going on in the Middle East," he said. "Unfortunately, oil is a speculative commodity." swhit6@hotmail.com

www.sfgate.com Verne Kopytoff, Chronicle Staff Writer Wednesday, March 5, 2003

Gasoline prices climbed to record highs across the Bay Area Tuesday, topped by San Francisco, where regular unleaded fuel cost an average of $2.19 a gallon, a new survey showed.

The milestone, based on daily data, puts a big exclamation point on three straight months of increasing costs at the pump. Though unaware of Tuesday's historical significance, drivers filling their cars knew one thing: They were paying too much.

"It's ridiculous," said Sandra Cerrigan, a sales assistant for an investment bank who had just paid $2.23 a gallon to top off the tank of her Land Rover at a Chevron station in San Francisco's South of Market neighborhood. "We're getting gouged."

Gas prices, which had been just shy of record levels since last week, leaped several cents overnight, according to a daily survey by AAA of Northern California. It was enough to break records in Bay Area cities and in California as a whole.

In addition to San Francisco, historic highs were reached in Oakland, where regular averaged $2.09, AAA said. In San Jose, the new peak was $2.08. Vallejo's was $2.04. Statewide, the new high was $2.04.

California's previous record was $2.03, set May 13, 2001, according to AAA. San Francisco's high, on a monthly basis, was in June 2001 at $2.17.

Tensions over a potential war in Iraq, cold weather on the East Coast and a strike in Venezuela are blamed for the soaring gas prices. They have pushed the cost of crude oil to $36.70 a barrel, just shy of a 12-year high reached last week.

Sean Comey, a spokesman for AAA, said gas prices may go even higher. After all, winter is usually among the cheapest times to fill up your car, he said.

"Typically, March is the beginning of what we consider to be the summer driving season," Comey said. "Prices usually head up from here."

Analysts said a U.S. attack on Iraq would almost certainly cause prices to rise, at least temporarily. They point to the Gulf War in 1991 as a model.

During the war, oil prices jumped for a couple of days until victory seemed assured. At that point, they plummeted.

When taking into account inflation, current gas prices aren't actually as high as they seem. A gallon of gas today would have to cost $2.70 to surpass what drivers paid in 1981.

That was after President Ronald Reagan deregulated gas prices. Pump prices shot up briefly but then returned to earth.

Nationally, gas prices averaged $1.68 Tuesday, according to AAA. The record is $1.72, set on May 15, 2001.

CALIFORNIA'S SPECIAL BLEND

California's gas is usually more expensive than most states. One reason is that fuel taxes here are higher than elsewhere.

But another factor has to do with California's special blend of lower-smog fuel. Refineries in the state produce just enough gas to satisfy the state's demand.

That increases the likelihood of shortages if a refinery catches fire or undergoes maintenance.

Refineries are switching from making winter gas to a different blend used during the summer to help reduce smog, which modestly curtails production.

San Francisco, in particular, has some of the Bay Area's most expensive gas.

The explanation given by station owners and analysts is the high cost of doing business in the city and the lack of highly profitable mini-marts.

The rise in gas prices has raised concerns among some politicians and consumers about collusion in the oil industry. A handful of U.S. senators and state officials have asked the Federal Trade Commission to investigate the matter.

A spokesman from the FTC declined to comment.

Sen. Barbara Boxer, D-Calif., has asked her staff to look into the issue of high gas prices but has not gone so far as to request an investigation by the FTC, according to her spokesman David Sandretti. He said that she'll announce something about gas prices within the next day or two.

Susan Hahn, a spokeswoman for the American Petroleum Institute, an oil industry trade group, insisted that the higher prices aren't a consequence of profiteering. She said that they are determined largely by crude oil prices and other factors.

"Various versions of this type of concern have been voiced many times," Hahn said. "And there have been many investigations at various levels of government, and they always come back showing that the No. 1 one thing that affects the price of gasoline is the basic factors of supply and demand."

But many consumers are convinced otherwise. At the SoMa Chevron station, drivers offered explanations ranging from an effort by President Bush to enrich his oil industry friends to manipulation by the service stations.

Virtually all the drivers complained that they have no alternative. But most also said that they try, within reason, to shop around for the lowest price.

SHOPPING AROUND

Susan Watson, a state Health Services Department worker from Oakland, said she tries to buy from some cheaper service stations near her gym in San Leandro. This time, however, she had no choice, because her motorcycle was running close to empty.

"It cost $10 to fill up my tank, and that's for a motorcycle," Watson said. "I used to pay $6."

Watson, who also owns a car, said she is thinking of buying a hybrid car, which runs on a combination of gas and electricity, to save money in the future.

Sam Van Vactor, president of Energy Insight, an energy consulting and research firm in Portland, Ore., said that gas prices are high enough that some consumers may indeed change their driving habits. They may ultimately buy more fuel-efficient cars or take public transportation.

But Van Vactor added that it takes time.

"Typically, people use credit cards," he said. "They have to wait until the bills start to pile up."

E-mail Verne Kopytoff at vkopytoff@sfchronicle.com

www.dailynews.com209541220774,00.html 3/5/2003 By Gregory J. Wilcox Staff Writer

The average price of a gallon of regular gasoline hit $2.036 Tuesday -- a record high price in California -- and industry experts said there was no relief in sight.

Tuesday's price barely beat the old record of $2.034 reached on May 15, 2001, according to the Automobile Club of Southern California.

Prices were just below the record in Southern California but were as high as $2.188 a gallon in the San Francisco Bay Area.

Regular fuel prices have soared 67.8 cents a gallon in the past 12 months. In some cases, the price spike has been rapid. For example, the state average climbed 3.2 cents a gallon from Monday to Tuesday.

Prices varied widely across California, with most of Southern California still below record levels, according to the Auto Club survey.

In the Los Angeles area, the price of regular self-serve averaged $2.006, 3 cents below the record. In Orange County, it was $2.022, just 1.8 cents shy of the record $2.04.

However, drivers in San Francisco paid a record $2.188; in Sacramento, gas prices hit a record $2.044, and in San Diego they hit a record $2.039.

Los Angeles-area drivers could find prices in record territory by week's end, said Auto Club spokesman Jeff Spring.

The question now is: how much higher -- and how much longer -- will prices rise?

"Who knows?" said Spring. "There is a lot of speculation going on, but some of the (price) underpinning is based on real facts."

The American Petroleum Institute, an industry trade group, notes that many factors are contributing to the high pump prices. A barrel of crude oil is trading near a two-year high; turmoil in Venezuela interrupted supply; there is uncertainty in the marker over war with Iraq; and it's been bitterly cold in the Northeast and Midwest. The latter means that, in some cases, heating oil production will be stepped up, which will cut into gasoline supplies.

The API also noted that the price of barrel of crude oil was in the high $30 range versus $18 a barrel a year ago.

In California, a seasonal change is also taking place as refiners switch from a winter to summer blend, which will now contain ethanol.

Also, this is the time of year that some refiners shut down part of their production lines for maintenance, said the California Energy Commission, and this could cut into supplies.

At the present time, "a couple" of refiners are this mode, but the state cannot divulge their names, said commission spokesman Rob Schlichting.

"Those are planned events, so they boosted their inventories to get ready for that. But supplies are a little tighter than we would like them to be," he said.

Schlichting also notes that the Auto Club price survey tends to be on the high side because it does not capture some low price outlets that do not accept credit cards.

The commission's survey for the week ending Monday found regular gasoline averaging $2.01 a gallon, the highest since it began in 1996.

And Schlichting agreed with the API assessment that, when adjusted for inflation, gasoline is a relative bargain.

For example, in 1981, the nation's motorists paid an average of $1.35 for a gallon of gas. In today's market, that would equal $2.70.

DRIVING FOR A BARGAIN

Here are some tips for driving around the record high gas price.

Shop Around: Follow the advice of Smokey Robinson and the Miracles who sang, "My Momma told me, you better shop around."

Knock off five to 10 cents a gallon or more by looking for the cheapest gasoline station near you. And despite advertising, all gasoline is pretty much the same.

Develop Habits: Accelerate gently but steadily, as NASCAR-style starts can decrease mileage by up to 12 percent. Try to avoid traffic jams, and use the radio to find alternate routes around congested areas. On the highway, use cruise control, since it saves fuel by maintaining a steady speed.

Slow Down: Fuel economy decreases as speed increases. For every mile per hour that you drive above 55 mph, a vehicle loses about 1 percent in fuel economy.

No Idle Time: Idling an engine equals zero miles per gallon. If you are not in a traffic lane and are going to be stopped for more than 30 seconds, turn off the engine. Restarting uses less fuel.

Chill Out. Turn off the air conditioner and let flow-through ventilation cool the car.

Slim Down: Shed excess weight like luggage racks and clean out the trunk. On average, each 100 pounds of needles weight reduces mileage by up to a half-mile per gallon.

Source: California Energy Commission