Rising gasoline prices fueling blame game

Wednesday, May 31, 2000

By DANA AMBROSINI Dana.Ambrosini@Thomnews.com and PETER URBAN nabrup@aol.com

Tight supplies may be pushing gasoline prices to record highs, but blame for skyrocketing costs is flowing aplenty.

The big oil companies blame OPEC for jacking up crude prices, while service station owners say the corporate giants are manipulating supplies to boost profits.

And everyone is miffed at environmental officials, saying their rigid stance on cleaner - but more expensive - gas is burning motorists' pockets.

Meanwhile, some politicians are calling for a cut in federal gas taxes and the release of part of the nation's Strategic Petroleum Reserve to curb increases.

Whatever the cause, Connecticut motorists are now paying an average $1.69 for a gallon of regular, unleaded gasoline, according to an unofficial survey Tuesday by the Connecticut Post.

That's 2 cents higher than the previous record set just last month. In some places, prices for regular have spurted 8 cents in a week, to $1.77.

An association of retailers in the state said prices will not come down any time soon.

"It's our opinion that the prices will continue to go up," said Chris Canavan, co-chairman of a committee of Gasoline and Automotive Service Dealers of America, a state trade group for hundreds of retailers.

Canavan said that $2 per gallon is not an unreasonable estimate for peak prices this summer.

Motorists Tuesday reacted to rising prices with resignation.

Jeff Nichio of Shelton noticed the increase as he filled up the tank of his Nissan Pathfinder at Cumberland Farms on River Road in Shelton, where regular gas was selling for $1.64 a gallon. He prefers a higher grade but it has gotten too expensive.

"I used to put high test in there but it started to cost almost 40 bucks," he said. "Now, the 87 [octane] is 29, 30 bucks."

At an Exxon on Route 111 in Trumbull, regular was selling for $1.72 a gallon as Lisa Satmary filled up her Ford Explorer. She said her family still planned to drive on vacations and hasn't cut back on everyday jaunts.

"What are you gonna do?" she said with a shrug. "I've still got my regular shopping to do."

James Fleming, commissioner of the state Department of Consumer Protection, said that Connecticut motorists aren't likely to get any relief from high gasoline prices until July 1 when the state reduces its gasoline tax by 7 cents a gallon. The state tax - now 32 cents a gallon - is the highest in the nation.

Rep. James Maloney, D-5, said Congress should follow Connecticut and cut the U.S. gas tax.

"I have sponsored a bill that would temporarily roll back the federal gas tax by 18.3 cents a gallon until prices return to a more stable level," he said. "Consumers should not have to face this hardship when such an obvious solution exists."

The current federal tax is 18.3 cents a gallon.

Rep. Christopher R. Shays, R-4, said that the Clinton administration needs to pressure OPEC to increase production so crude prices drop.

Rep. Rosa DeLauro, D-3, agreed, adding that another option would be to release part of the nation's Strategic Petroleum Reserve.

Dan Gerstein, a spokesman for Sen. Joseph I. Lieberman, D-Conn., said the senator believes reducing U.S. dependence on foreign oil through alternative energy sources is a key to stabilizing gasoline costs.

Prices are already up 38 percent from a year ago, after the average U.S. price for regular grade self-serve gasoline jumped for a fourth week, a U.S. Department of Energy survey of 800 filling stations showed.

OPEC's squeeze on supply is the major reason prices have rebounded after a short dip, said Steven Guveyan, executive director of the Connecticut Petroleum Council. He pointed to the price of crude oil - again more than $30 a barrel - after weeks below $28 a barrel. The big guys are stuck dealing with OPEC, Guveyan said.

Major oil companies are also pointing the finger at Environmental Protection Agency regulations that require use of more expensive gasoline blends that cut pollution during the summer.

But Canavan said more blame lies with the big oil suppliers that are taking advantage of a booming economy and vacationing Americans. He said a variety of factors contribute to gas pricing, but large oil companies are capitalizing on OPEC's continuing squeeze on supplies to gouge state motorists.

"Connecticut is a generally affluent market," Canavan said. "They charge more here."

Using just-in-time delivery, Canavan said wholesale suppliers keep only enough inventory to meet demand, so any tightening in supply immediately causes a price spike.

Derrick Hinmon, a spokesman for ExxonMobil, wouldn't address the charges.

"The only thing I can tell you is that the prices are affected by a variety of factors," he said.

Stocks of gasoline are less than half what they were in the Northeast last year, said Charles Isenberg, executive vice president and CEO of the Independent Connecticut Petroleum Association, which represents about 350 independent distributors and retailers.

"Major oil companies are taking their profits," he said, though he reserved most of his ire for OPEC.

Staff writer Thane Grauel and Bloomberg News contributed to this report.

http://www.connpost.com/local3.html

-- Martin Thompson (mthom1927@aol.com), May 31, 2000