http://orlandosentinel.com/business/orl-biz-gas-011201.story?coll=orl%

Fill up car now, gas prices will go higher Todd Pack of the Sentinel Staff

January 12, 2001

A looming cut in oil production, the temporary closing of several oil refineries and a scarcity of a chemical additive used in gasoline is pushing gas prices higher -- a nickel a gallon in the Orlando area during the past week.

The average price for regular unleaded was back up to $1.40 a gallon on Thursday, but some gas stations are charging more than $1.50 a gallon.

Regular was an average $1.35 a week ago -- the cheapest it had been since February.

"I’m telling customers to go get their gas before I raise the prices again," said Ruth Clark, manager of a DeBary Cumberland Farms Station that increased regular unleaded from $1.33 a gallon two weeks ago to $1.53 on Thursday.

The price at the pump should climb several cents more during the next two to three weeks, but the shock should be temporary as prices fall again, analysts said.

Analysts had predicted prices would rise after the holidays, but "it’s unusual that it’s happened so quickly," said Fred Rozell, an analyst with OPIS Energy Group, a Lakewood, N.J., company that tracks gas prices nationwide.

Michelle Walkuski found herself popping her gas tank cover and pumping regular into her Toyota RAV4 without noticing the price.

The price was $1.47 a gallon.

"What?" she said, surprised. "I didn’t even look. $1.47 a gallon! That’s a lot!"

Several miles away, prices were better and business was brisk at a Mobil station at East Colonial Drive and Primrose Avenue. The price tag for regular unleaded: $1.37 a gallon.

"This station is almost always low," said Hadi Ismail, a regular customer and local retailer. "But even here, they’ve gone up 10 cents a gallon in the past two days."

With the kids in school and families taking few trips, gas prices usually don’t rise appreciably until spring break, but things are different now for several reasons, he said.

Crude oil prices surged Tuesday and Wednesday on comments by Qatari Oil Minister Abdullah vin Hamad Al-Attiyah that members of the OPEC oil cartel has agreed to make "substantial" production cuts when it meets Wednesday.

OPEC should cut production "at least" 2 million barrels a day beginning Feb. 1 to shore up prices, he said, a third more than expected.

Crude oil futures on the New York Mercantile Exchange spiked on his remarks, passing $29 a barrel for the first time since mid-December. Light, sweet crude for February delivery was up $1.84 Wednesday to $29.48 a barrel. Prices fell 7 cents a barrel Thursday.

Wholesale prices have climbed 20 cents a gallon to about 90 cents since just before Christmas, with about 10 cents of that in the past week, OPIS said.

In the past, an actual decrease in production by the oil cartel, much less talk of a decrease in production, would not bring about price surges for a few months, said Steve DeLuca, president of Delco Oil Inc. in DeLand.

But prices now are "driven by news articles and people’s opinions. It has no bearing on what the supply situation actually is.

"It’s the tail wagging the dog at the moment," he said.

OPIS Director Tom Kloza said he thinks the spike is "a false alarm," an overreaction to OPEC’s expected cut. He expects cooler heads to eventually prevail and crude and wholesale prices to fall quickly, though it may be several weeks before oil companies cut prices at the gas pump.

Still, U.S. gas supplies are tighter than usual because several refiners have closed for maintenance, said Bob Slaughter, general counsel for the National Petrochemical & Refiners Association in Washington.

Oil companies usually do the work in the lull between the summer travel season and winter, when demand for heating oil is highest. Work was delayed because last summer’s record-high gas prices forced refiners to step up production, throwing their schedules out of whack.

Rising natural gas prices, meanwhile, have affected the price of methyl tertiary-butyl ether, or MTBE, an additive used to produce cleaner-burning gasoline. MTBE is derived from natural gas and accounts for about 11 percent of the retail price of gasoline.

Richard Burnett and Sean Mussenden of the Sentinel staff contributed to this story.

-- Martin Thompson (mthom1927@aol.com), January 12, 2001

Answers

East central Indiana unleaded jumped 27 cents last week from $1.22 to 1.49 over night. I filled up yesterday at $1.54. It's starting to pinch purses.

-- Ruth Angell (bar@bpsinet.com), January 13, 2001.