Prices at the pump probably will climb

Crude oil prices hit $30 - highest point in 9 years

Posted: Wednesday, February 16, 2000

NEW YORK - As Lydia Gamos filled up her fuel tank, she refueled her complaints about rising gas prices.

The homemaker grudgingly paid $1.45 per gallon to gas up her Honda in Houston. ``It certainly does hit you in the pocket'' she complained Tuesday.

The hefty prices at the pump have Gamos holding her driving to a minimum ``until it gets a little cheaper.'' She may be in for a long wait.

Prices that now average $1.41 a gallon in the United States could stay high into the summer travel season. Some analysts even predict pump prices up to $1.60 and $1.70 per gallon before the problem eases.

In a year when prices have been swelling nationally, Juneau prices at the pump have also risen, though less dramatically. Cost-per-gallon in the city now ranges between $1.53 and $1.64.

Americans Outside are already talking about curtailing their driving just as resorts and other vacation spots are starting to gear up for summer.

``It's ridiculous at this point,'' Mike Fox, 33, said as he filled up at a gas station in midtown Manhattan. ``I do as little driving as possible because it's so expensive.''

Gasoline prices have been rising steadily since last March, when the Organization of Petroleum Exporting Countries cut crude oil production by 7.5 percent, or more than 2 million barrels a day, to boost prices that had fallen to 12-year lows.

Fears that gas prices will go even higher were raised Monday when the price of crude oil futures closed at $30.25 a barrel - topping $30 for the

first time in nine years.

Whether OPEC's manipulation of the crude market has a direct affect on Juneau's gasoline prices is anybody's guess, said Jeff Hansen, manager of gasoline wholesaler Taku Oil Sales.

Juneau suppliers order by the bargeload and usually have a large inventory on hand, Hansen said. ``So there's a lag time for changes in Juneau's gas prices.''

Some of the rise nationally is attributable to this winter's fueloil shortage in the Northeast, which in turn drew supplies from the Midwest and other parts of the country, he said. ``And gas prices follow in sympathy.''

The predicted rise in the average gasoline price of 20 cents a gallon nationally probably will be reflected in Juneau prices as well, eventually. ``There's no reason it won't happen here,'' Hansen said.

Analysts believe OPEC will come under increasing pressure - especially from industrialized nations such as the United States - to raise production at its next meeting in late March.

Roger Diwan, managing director for global oil markets at The Petroleum Finance Co. in Washington, expects OPEC will increase oil production 1.5 million to 1.7 million barrels a day. But because inventories at refineries already are low, ``that won't be enough to bring prices down dramatically and change the gas outlook in the United States.''

He suggests ``people better get ready'' for national gas prices averaging $1.60 a gallon before they begin easing.

Part of the problem is that U.S. refineries normally increase production of gasoline during the first three months of the year in anticipation of higher summer demand. That's not happening this year because the high crude prices and short supplies have prompted many refiners to cut back operations.

Ahead of the OPEC meeting next month, the Clinton administration is starting to lobby oil producers to boost output.

On Saturday, U.S. Energy Secretary Bill Richardson is expected to travel to Mexico to discuss oil prices. He is scheduled to visit Saudi Arabia and Kuwait, two big OPEC producers, next week.

Mexico, though not an OPEC member, has cut back production in sympathy with the oil cartel. Analysts point out that it is one of the few non-OPEC oil-producing countries that could quickly raise crude oil output.

The heating-oil price hikes have prompted the U.S. government to make $200 million in aid available to low-income families. The average retail price for heating oil has nearly doubled over the last year to $1.66 per gallon, up from 86 cents in January 1999, according to the U.S. Energy Information Association.

So far, the Clinton administration has resisted tapping the 580 million barrel Strategic Petroleum Reserve to help increase the supply and bring down prices.

Still, ``I have not closed off any options,'' President Clinton said Tuesday.

Empire writer Fernand Chandonnet contributed to this report.

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