wcco.com CBS Feb 24, 2003 11:51 am US/Central (CBS) (NEW YORK) Two senators have asked the Federal Trade Commission to monitor the gasoline market and investigate any possible anti-competitive activity, as a national survey showed gas prices continuing to rise. An industry analyst said Sunday that gas prices increased 7 cents per gallon over the past two weeks, pushing pump prices to near record levels. "The causes of the price increases are not entirely clear, but it is critically important to ensure that they are not caused by price-fixing or price gouging by oil companies, gas stations, or others within the gasoline supply chain," Sens. Herb Kohl, D-Wis., and Mike DeWine, R-Ohio, wrote the FTC. But the national survey indicated the upward pressure on prices might be easing. The average weighted price for gas nationwide, including all grades and taxes, was approximately $1.70 per gallon Friday, according to the Lundberg Survey of 8,000 stations nationwide. That price is within 7 cents of $1.77, the all-time high recorded by the survey on May 18, 2001. Gasoline cost about $1.63 a gallon on Feb. 7, the date of the last Lundberg Survey, an increase of 11 cents over the previous two-week survey. "The pace of gas prices has already slowed," Trilby Lundberg said. "The other indicators show a possible decrease in prices." Increased production in Venezuela as a strike there eases, the approach of warmer weather, and the reopening of various U.S. refineries that had been idled for annual maintenance should help slow or end the price spiral, Lundberg said. Crude oil prices are also up due to fears of a war with Iraq, but if the U.S. goes to war, or if the crisis is resolved, that oil bubble could burst. Prices rose 30 cents a gallon in 1990 after Iraq invaded Kuwait, and then dropped 30 cents in 1991 following the Persian Gulf War, Lundberg said. The national weighted average price of gasoline, including taxes, at self-serve pumps Friday was about $1.67 per gallon for regular, $1.76 for mid-grade and $1.85 for premium. CBS News Correspondent Sandra Hughes has reported that, if adjusted for inflation, gas prices are still lower than they were in the 1970's. The Lundberg survey did not reflect what effect, if any, Friday's massive explosion at a fuel storage facility in Staten Island, New York would have on fuel prices. The blast — on a barge stocked with 100,000 barrels of unleaded gasoline near a storage facility that holds 2 million barrels of oil products — pushed crude oil prices up more than a dollar in trading Friday. Heating oil and gasoline futures also surged. Prices eased somewhat after analysts and traders realized the loss of gas supplies would pose only a short-term problem for the Northeast. The United States uses about 13 million barrels of oil a day. Making their case for an FTC probe, Kohl and DeWine cited examples like a recent spike in gas prices at Akron, Ohio filling stations from $1.53 a gallon to $1.74 a gallon, in what the senators claimed was a matter of hours. The Federal Trade Commission last probed gasoline pricing practices during a sharp rise in fuel costs during the summer of 2000. The following March, the commission reported that it had found "no credible evidence of collusion or other anticompetitive conduct by the oil industry." However, the FTC did find that the price rises were due, in part, to factors controlled by the fuel companies.

southflorida.bizjournals.com Robin Londner  

Coral Gables-based consultant firm Intellichem said Venezuelan workers are gradually going back to their jobs as of this month, but it also said oil workers have decided to continue their strike to press for early election.

The continuing labor problems in Venezuela's oil industry concerns South Florida because the majority of the petroleum that arrives at Port Everglades is from refineries in Venezuela, the Gulf of Mexico, Aruba, the Bahamas and Mexico. More than 1,000 petroleum tanker-trucks leave the port every day.

The Broward County port is the second-largest East Coast non-refinery center for petroleum products. In fiscal year 2001, the port processed 117.9 million barrels of fuel, or 16.77 million tons.

Problems in Venezuela and other countries have also hurt the Port of Miami. When that port released its container totals for fiscal year 2002 in November, the struggling economies of Venezuela, Argentina, Brazil, Uruguay and Chile pulled down overall tonnage from South America by 12 percent.

Fuel costs have also impacted the costs consumers pay for fuel. For businesses such as trucking and aviation that depend on fuel prices, problems in Venezuela continue to drive up fuel prices. Earlier this month, travel organization AAA blamed the continuing loss of oil and gasoline imports from Venezuela for lowering fuel inventories, but also said nothing fully justifies the dramatic increase in gasoline prices consumer are seeing across the United States.

Up about 13 cents from the middle of January, as of Feb. 11, AAA put gas prices at $1.60 a gallon. The price was the highest since June 2001 when the average price was $1.66 and the highest February price ever recorded by AAA.

Florida Attorney General Charlie Crist has indicated he thinks those prices are too high. Last week, he sent a letter asking the Federal Trade Commission to see if gasoline sellers are colluding to increase prices in the state.

"The recent spike in fuel prices is startling," Crist said.

Also last week, Juno Beach-based FPL Group (NYSE: FPL) made it clear it wants the state to help it with fuel costs. The utility cited U.S. and world events as driving up prices its electric subsidiary, Florida Power & Light Co., must pay for fuel. Because of these increases, FPL Group asked the Florida Public Service Commission to approve a 6.2 percent increase on residential bills, a 7.3 percent increase on commercial bills and an 11.6 percent increase on industrial bills, all beginning in April.

FPL Group said the average price it expects to pay for a barrel of oil to generate electricity is 8 percent more this year than last year. FPL Group said it expects to spend nearly $3 billion for fuel in 2003, but did not give a figure from last year for comparison.

"What is happening to fuel prices from events around the country and around the world has been a tremendous frustration to our customers and all of us at FPL who have worked so hard to keep our operating costs down in order to keep bills low," said Paul Evanson, FPL president.

morningnewsonline.com Feb 23, 2003 By DWIGHT DANA Staff Writer

Mark Belk pumps gas at the Sav-Way at Five Points Sunday. Belk drives to the beach every weekend with his sons and said he has felt the effects of rising gas prices.

FLORENCE -- Chris Morris is from Lake City but he was filling up the tank of his red Ford pickup in Florence on Sunday because the gas was cheaper.

"This is the cheapest I've found it," he said topping off the tank with regular selling for $1.49 a gallon at Tommy's Quick Mart on South Irby Street.

"But I think the public is getting gouged by the petroleum people," said Morris, the supervisor at a brass company in Horry County. "Somebody's making some money and it's not those of us who are paying higher gas prices."

Todd Davis, a foot and ankle surgeon, was filling up a 2003 BMW 325i with mid-priced high test going for $1.59 a gallon, 10 cents less than the premium juice at $1.69.

"Gas prices don't seem like they are going up with the price of crude oil from what I've read," said Davis, who commutes from Florence to Columbia each day. "It seems to me like they are being hyper-inflated, especially with the threat of war in Iraq."

"Customers keep wondering how high the prices for gas are going to go," said Helen Jordan, a cashier at Tommy's. "I think there are those using the threat of war to hike the gas prices."

Jordan's remarks were echoed by Cindy Cook, who was busy ringing up receipts at another cash register.

"The customers are frustrated and wonder if the gas prices are ever going to come down," Cook said. "I tell them the store here doesn't have any control over what we have to charge for gas."

Prices were higher over at the Sav-Way at Five Points. But one of the perks for paying more was the swiftness of Jason Lewylen, who pumps gas for customers eight hours a day.

Lewylen barely had time to catch a drag on a cigarette in the cubbyhole between the gas pumps that serves as his outdoor office.

"I don't know what's causing the gas to go up, but I have to pay the same price as my customers," Lewylen said, handing change to a driver and thanking him for his business. "What with them talking about war and all that stuff, gas prices are probably going to keep going up."

Jordan buys gas frequently from Sav-Way because he likes the service offered by Lewylen and others who pump gas.

"I think the worry about war in Iraq and problems in oil-producing countries like Venezuela and Nigeria are causing the prices to go up," said Jordan, who retired in 1994 after selling Chevrolets for 40 years at a family owned dealership. "All I know is what I read. I guess we'll just have to learn how to conserve more."

But Judy Martin, a Sav-Way cashier for 11 years, has a different take.

"I don't believe we are that short of gas for it to go up like it's gone up," Martin said while sitting at a table during her break. "I think the price for gas is entirely too high."

Martin, eating fruit from a shallow Styrofoam container, had more to say as she pointed her plastic fork for emphasis.

"They can talk about war and all that, but I worked here long enough to see gas go up in the summer and during holidays and down when winter blows in," she said. "I think they make up their own rules. They just want us to hush up and pay the higher prices."

www.redding.com Bill Choy Record Searchlight

KEEP ON TRUCKIN'?: Mike Fuller, 58, of Cottonwood, an independent truck driver for about three years and a trucker for more than 30 years, is concerned about the rising cost of diesel. His wife has initiated a letter-writing campaign to legislators to try to curtail the high cost of gas.

February 24, 2003 — 2:17 a.m. When Gerry Hotchkiss stopped to refuel his big rig last week, he was appalled to see the price of diesel 20 cents higher than the previous week.

"It has a tremendous impact," he said about the high cost. "How do they (oil companies) justify it? I'm angry and upset. . . . The little guy is finding it harder to absorb the cost."

An independent trucker since 1968, Hotchkiss, 55, of Cottonwood said the increase is draining his wallet and profits.

People across the country have felt the pinch at the gas pumps in recent months, but trucks drivers are especially hard hit.

On Saturday, the average cost of diesel in Redding was $1.85 a gallon and $1.90 statewide, the AAA Daily Fuel Gauge report said. Last month, diesel averaged $1.62 a gallon in Redding and $1.39 a year ago.

Nationwide, the average cost of diesel was $1.75 on Friday, up from $1.53 a month ago, and $1.22 a year ago, the AAA said.

Patti Fuller is fed up with the high diesel prices truck drivers have to pay. She has initiated a letter-writing campaign to encourage legislation to curtail the cost to truckers like her husband, Mike.

Mike Fuller, 58, an independent trucker for three years and a truck driver for more than 30 years, said he supports his wife's letter-writing campaign.

Since Thursday, Patti Fuller, 45, has called and written to more than 30 truck drivers, urging them to write to their representatives.

"We're trying to get something going," Fuller said. "I'm not hoping for thousands. I'm looking for millions" of people.

While the rising cost of diesel has affected all truckers, the smaller companies and independent truckers are bearing the brunt of the surge in gas prices.

The smaller operators do not have large enough fleets to negotiate a higher freight rate or fuel surcharge, Patti Fuller said.

Mike Fuller, was able to buy his own $150,000 big rig nearly three years ago. He became an independent truck driver delivering produce across the West Coast.

"I'm still busy, but the high fuel price hurts," he said. "Money is a big concern. It's coming out of my pocket," he said.

About 50 percent of his profits now go to his gas bill.

Patti Fuller knows of truckers who retired or sold their trucks as a result of the escalating cost.

"It just breaks my heart to see him sell his truck," she said of a friend who got out of the business. "I'm not going to sit here and do nothing when something needs to be done."

Hotchkiss knows many independent truck drivers who have joined larger truck companies as a way to mitigate the soaring fuel costs.

Hotchkiss, who hauls lumber and gravel, is concerned the annual summer gas price-hike could cripple his business this summer — his busiest time of the year.

He said he travels about 10,000 miles each month during the summer and typically pay between $1,000 and $2,000 per month on fuel.

Hotchkiss said he might consider working less in the summer if gas prices continue to climb.

"It might be cheaper to sit a day," he said. "It's getting to the point where you have to get out your pencil and figure out if you're hauling someone's lumber for nothing."

The high fuel rates have affected some larger truck companies as well.

On Wednesday, Robbie Cattanach Trucking of Anderson went out of business, costing about 160 employees their jobs.

The company said the cost of fuel, soaring worker's compensation, expensive liability insurance and other expenses contributed to its closure.

A factor driving gas rates is the price of crude oil.

The price of Alaskan crude oil is at $36.14 a barrel, compared with $18.22 a year ago, the California Energy Commission reported Friday.

The increase in oil prices is being blamed on fears of an impending conflict with Iraq, an oil strike in Venezuela, fear of an oil strike in Nigeria and cold weather in the East Coast, California Energy Commission spokesman Rob Schlichting said.

"It (gas price hikes) will continue until the price of crude oil falls," Schlichting said. "And that will be dictated by American foreign policy. . . . When there's a resolution, it should stabilize."

The energy commission does not consider the high rates price gouging, Schlichting said.

Despite the high fuel cost, Mike Fuller said he will continue to run his truck routes. He still has mortgage and truck payments.

"I have to try to stick it out as long as I can," he said. "If we don't do it, someone else will."

"We need help now," Patti Fuller said. "Not in a month or two. . . . This is our livelihood. If we don't get this resolved we could lose everything."

Reporter Bill Choy can be reached at 225-8217 or at bchoy@redding.com.

Monday, February 24, 2003

www.northjersey.com Friday, February 14, 2003 By KEVIN G. DeMARRAIS Staff Writer

The price signs tell the story at Wayne Exxon on Alps Road: The average price of unleaded regular in North Jersey, according to The Record's Marketbasket Survey, has increased 13 cents since mid-January, to $1.55. Heating oil prices have increased even more, from $1.45 to $1.78. (CHRIS PEDOTA/THE RECORD)

Blame it on the prospects for an attack on Iraq. Blame the lingering strike in Venezuela. Blame nervous commodities traders. You can even blame Mother Nature.

To people like Gilberto Drada, it really doesn't matter who is responsible.

What matters is that fuel prices have soared, and it costs the Little Ferry man about $50 a week to keep his small delivery truck on the road. He drives for a Paterson soda company, and a year ago the tab was $30 to $35.

"What am I going to do?" Drada said after paying $32.97, at $1.69 per gallon of diesel fuel, to fill up at a Hess station in Paramus this week. "I have to drive. It's my work."

If the increase affected drivers only, that would be bad enough. But higher energy prices could have a significant impact on an already sputtering American economy, said economist Howard Tuckman, dean of the Rutgers University Business School in Newark.

Increases in fuel prices are "the equivalent of a tax, taking money out of a consumer's pocket and putting it into a place where it is not likely to stir the economy," Tuckman said.

A number of factors that would individually push prices higher have, combined, created the recent surge.

Much is due to market concerns about disruptions of crude oil supplies from the Middle East if the United States goes to war in Iraq. If hostilities are brief and successful, oil prices could drop quickly, as they did after the Persian Gulf war 12 years ago, officials said.

At the same time, petroleum imports from Venezuela have been cut sharply by a 2½-month general strike, helping shrink the U.S. oil supply to its lowest level since 1975. Before the strike, Venezuela was the world's fifth-largest oil exporter, shipping 2.4 million barrels a day, half to the United States.

With the supply chain disrupted, some companies have taken refineries off line for early maintenance, much as a Nascar driver takes advantage of a yellow caution flag to hit the pits early, said Tom Kloza, chief oil analyst for the Oil Price Information Service in Lakewood.

Wallets under assault

At 269.8 million barrels, crude oil stocks are now just below the lower end of an inventory range needed to assure enough oil is available for efficient refinery operation, the Energy Department said Wednesday.

The combination pushed the price of crude over $36 a barrel Thursday, about $10 more than in November, and higher prices for gasoline and oil deliveries flow directly from that, Kloza said. "It's definitely not price gouging."

Even as supplies drop and rates rise, the number of "degree days" - a common measure of the amount of energy needed for heating - is running 40 percent higher than a year ago, creating a one-two assault on consumers' wallets.

Each of these factors has contributed to what some critics say is an overreaction by commodities traders on the New York Mercantile Exchange. "It all starts at the Merc," said Eric DeGesero, executive vice president of the Fuel Merchants Association of New Jersey in Springfield. "It is a buying momentum that feeds on itself."

The same "irrational exuberance" that Federal Reserve Chairman Alan Greenspan spoke of at the height of the stock market bubble "is permeating the energy commodity market," DeGesero said.

The unpredictability was seen Thursday when heating oil futures rose 2.2 percent in response to colder-than-normal weather in the Northeast, but natural gas futures went down for the third time this week because traders see warmer weather ahead.

That's what makes it difficult to predict where prices are going, Kloza said. "Most people think we're at elevated numbers that can't be sustained . . . but we're in the grip of irrational things happening and you don't fight emotions."

The cold-weather factor has probably peaked and refineries should be coming back on line, Kloza said. But uncertainty about Iraq and Venezuela remain, and the result is higher prices at the pumps.

In The Record's Marketbasket Survey of more than 60 North Jersey gas stations, unleaded regular has gone from $1.42 in mid-January to $1.55 this week. That is almost 36 percent higher than last year's average of $1.14, although the 2002 price was low because a post-9/11 glut forced suppliers to slash their prices.

Heating that house

Home heating oil prices have risen even more, soaring from $1.45 in January to $1.78 this week in the Marketbasket Survey. A year ago, those prices averaged $1.14.

Many increases are passed directly to customers, as with gasoline and heating oil, or through fuel surcharges, which were common among airlines and trucking companies three years ago.

But market conditions sometimes prevent businesses from passing along higher prices, however, and that can be a problem, Tuckman said. "Firms in extremely competitive markets may have to swallow the increase."

If the company is on the edge financially, the inability to pass along higher costs to customers could be enough to push it out of business or into bankruptcy, he said.

Many of the nation's airlines are at that point now, so a significant and sustained run-up in fuel prices "could definitely tip them over into bankruptcy by early summer," Tuckman said.

In a similar way, higher heating bills will put state agencies and universities under increased financial pressures, and "will magnify the budget cuts by the governor," he said.

About the only people and companies not paying higher prices are those that hedged by locking in prices last year.

That includes heating oil customers who signed up for a guaranteed price last summer and gas heat customers, who benefit from Public Service Electric and Gas Co.'s advance purchase of 80 percent of its natural gas at a preset price.

But the additional 20 percent has to be purchased on the open market - where gas prices have more than doubled in the past year - so customers face higher charges down the road.

Some airlines also have locked in prices for some of their jet fuel - which is similar to home heating oil and diesel - but that may not be enough.

"We're hedged through the first quarter," said Julie King, a spokeswoman for Houston-based Continental Airlines. "It's always an item that we watch carefully, and can definitely have an impact on our business."

In the past, airlines have imposed fuel surcharges. Under federal rules, the carriers are prohibited from announcing them in advance.