Two weeks ago the price in the Twin Cities was $1.39, though I did find $1.29. Last week the price climbed to $1.59. Tonight I found $1.69 and $1.79 at SA.

What's going on? OPEC has not shorted us. I've heard of no refineries down. There is no holidaY high usage. The refineries haven't switched to heating fuel.

WHY ARE WE BEING GOUGED?

-- John Littmann (johntl@mtn.org), August 23, 2001

Answers

John,

Maybe this will answer your question.

Gas prices up 26 cents in two weeks

By Steve Wideman

Post-Crescent staff writer

An Illinois refinery fire, coupled with scheduled maintenance shutdowns of other refineries, could keep gasoline prices high for weeks, a local fuel trader said.

The price for a gallon of unleaded regular gas in Appleton jumped 26 cents in two weeks at some stations, from $1.399 a gallon on Aug. 9 to $1.659 today.

Mike Koel, a trader for U.S. Oil Co. Inc. in Appleton, said an Aug. 14 fire that damaged a Citgo refinery in Romeoville, Ill., could shut the facility down for up to six months instead of the two weeks estimated in initial reports.

"The six months is just a rumor right now, but the fire has caused the market to be very tight on product," he said.

Gas prices in the Fox Valley began to climb shortly after the fire closed one of four Chicago refineries that supply gasoline to the area.

The Citgo refinery also supplies reformulated gasoline to the Chicago and Milwaukee markets, as well as heating and jet fuel.

Kent Young, a spokesman for the Tulsa-based Citgo Petroleum Corp., said it's too early to tell when the refinery, which has a daily capacity of 163,000 barrels of oil, will be back in operation.

"We don't have an estimate we can hang our hats on," he said.

http://www.wisinfo.com/postcrescent/news/082301-4.html

-- Martin Thompson (mthom1927@aol.com), August 23, 2001.

Thursday, August 23, 2001

Gas costs increase 40 cents

By KELLY JOSEPHSEN Pantagraph staff BLOOMINGTON -- Motorists can't say they weren't warned, but that's little comfort when gasoline prices shoot up 40 cents like they did Wednesday in the Twin Cities.

For several weeks, fuel industry experts have warned that gasoline prices would rise as summer draws to a close. Early in the week, most local service stations were selling a gallon of self-serve unleaded regular fuel for about $1.30. On Wednesday, drivers encountered an average price of $1.70, according to a survey of 14 Bloomington- Normal retailers.

Price hikes also were being seen in other areas of the state. The same $1.70 figure was reported in the Peoria area, for example, though the size of the jump was not as large there -- about 15 cents from Tuesday's average.

"It is a combination of what we've been reporting for the past few weeks," said Mark Bruno, a spokesman for the AAA-Chicago Motor Club that monitors gas prices across the state.

"Probably the two major factors are the market's response to an (Organization of Petroleum Exporting Countries) decision to cut production Sept. 1 and the refining industry's decision to undergo maintenance during the summer rather than waiting until winter when demand is lower."

Bill Fleischli, executive vice president for the Illinois Petroleum Marketers Association, said a fire last week at the Citgo Petroleum Corp. refinery near Romeoville also caused a steady rise in wholesale fuel prices in Illinois. The refinery, a big supplier for Chicago and downstate Illinois, will be out of commission for two months, so prices probably will remain on the high side for the immediate future, he said.

"All summer we said supply and demand were equal, and that any interruption in supply would cause a big problem," he said. "Now we're seeing that supply interruption."

Also as previously noted, Bloomington-Normal retailers have sold gas at or below cost for much of the summer because of new competitors entering the market. So, when supply problems forced prices higher, the change was inevitably dramatic, said Fleischli.

"Bloomington has been a depressed market for a long time. Now, people selling gas at or below cost have realized they can't sell for 20 to 30 cents below cost," Fleischli said.

While Bruno and Fleischli aren't trying to tell consumers, "We told you so," they did say a big price jump like Wednesday's is something downstate drivers should have been prepared for.

And, while AAA can't put a number on how high prices might go, Bruno said the situation could get worse.

"The factors out there could possibly push gas prices higher," he said. "We don't know how much, but I think in Illinois we will see prices rise before summer's over."

And Fleischli had more bad news -- already in Chicago, the Citgo fire has forced a situation where stations are only allowed to purchase set amounts of wholesale fuel at a time. If other supply interruptions occur -- including those caused by planned maintenance - - that could trickle down to Central Illinois, he said.

Once the peak driving season ends, however, Bruno said prices should settle down as demand drops and refineries no longer have to produce reformulated "clean" fuels the Environmental Protection Agency requires be used in large cities during the summer.

http://www.pantagraph.com/stories/082301/new_0823010030.shtml

-- Martin Thompson (mthom1927@aol.com), August 23, 2001.

I think we are being had again by the utilities. These gas prices went up just in time for the Fall and Winter weather. I don't believe a word they say anymore. All of it is contrived to line thier pockets with our hard earned money! I may have to pay it, but at least I know my enemy now.

-- Judy/W (judywhalen@aol.com), August 23, 2001.

It could just be a local thing, I didn't know whether it was national. A few months ago the refinery that supplied Twin Cities SA's went down. So the chain bought from the other refinery. This raised prices and made it hard for the independents to get supplied, some had to shut down their pumps for a couple of days or not sell every grade.

-- John Littmann (johntl@mtn.org), August 23, 2001.

Beginning September 1, OPEC has agreed to reduce production by 1 million barrels a day which has a direct impact on oil futures which has a direct impact on the price of gasoline. The price of oil dropped too low due to our conservation of driving and overall reduced economic climate so OPEC decided to cut production in order to boost prices. So gas dropped from the ridiculous prices in May and then we started driving like crazy because gas was a bargain again. Now gasoline inventories have seen a significant drop therefore its time to jack up prices again. Of course thats in general. It excludes additional, localized, aggravating factors like refineries blowing up.

That's why I bought in on oil and gas stocks at its ebb this summer. Those cheap prices were temporary. I predict that we'll have a soaring of prices for a bit. After the production cut it will take a while for prices to stabilize but people will cut back on driving again. But by then I think the global recession will be in full swing by next March additionally impacting consumption and the price of oil should drop dramatically once again. Keep in mind OPEC wants the price of oil to stay between $22-$28 per barrel. They make additional cutbacks in productions in order to maintain the price.

-- Guy Daley (guydaley1@netzero.net), August 24, 2001.

John, it is not just a local thing. On Wednesday, fuel prices at the pump shot up in Calgary, Alberta, too. Weird.

-- Rachel Gibson (rgibson@hotmail.com), August 24, 2001.