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Alaska gas prices fall as national prices climb

Drop due to excess production capacity at state's major refineries

Posted: Thursday, June 22, 2000

FAIRBANKS -- Something unusual has happened to the price of gasoline in Alaska.

While the price for regular unleaded has soared an average of 13.3 cents a gallon around the nation, Alaska's has dropped and, for the first time since analysts can recall, prices in the Last Frontier are lower than Detroit, St. Louis, even Tulsa, Okla.

``I couldn't believe Alaska headed down,'' said Charity Watt Levis, a spokeswoman at AAA who tracks the data.

The average price for regular unleaded in the state dropped a penny a gallon the past month, bringing Alaska's average to $1.61. Meanwhile, supply problems in the Midwest pushed the national average to just over $1.64 a gallon -- the highest in history, according to the AAA. In Juneau, where gas prices are typically higher than the state average, gas prices have held steady over the past month at about $1.71 a gallon.

Last July 4, prices averaged $1.28 in Alaska, $1.44 in Juneau and $1.15 across the nation.

Why are average Alaska gas prices lower now than in the rest of the nation? Excess production capacity at the state's two major refineries.

``All the refiners came out of the winter with a lot of gasoline stock,'' said Jeff Cook, spokesman for Williams Alaska Petroleum Inc. which operates a refinery in North Pole. ``We refine more gasoline than we can consume in this state.''

Alaskans buy about 672,000 gallons of gas a day, Cook said, whereas production has a capacity of more than 750,000 gallons. ``Right now, there's a lot of competition.''

That's not the problem Outside, where a leak in a key pipeline and routine maintenance on another have put a pinch on markets in St. Louis, Chicago and Milwaukee, Levis said.

Compounding the problem are new federal regulations, effective June 1, requiring gas stations across several states to sell cleaner-burning reformulated gasoline.

``We're not having a shortage, but our reserves are not up to the level we have had in the past,'' Levis said, adding that the problem will likely get worse before it gets better.

Tony and Marge Bumgarner drove from Lockport, Ill., in May bound for a summer of sightseeing around Alaska. Back then, gas prices were under $1.60 a gallon at home.

Little did they know, they could escape the high prices back home by coming to Alaska and its relatively cheap gas. Prices back home are about now $1.80 a gallon.

``The (Alaska) gas prices are a total shock for us,'' she said.



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