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Gas cost up; Oil industry: Katrina did it

Critics of nation's fuel-cost increases suspicious of disaster profiteering

Posted: Wednesday, September 14, 2005

Every time Joyce Simons drives to Haines from her home near the Canadian border, gasoline prices go up.

"Every day at 3 p.m. it changes," Simons said.

Simons reported Tuesday that the price for fuel in Haines is $3.53 a gallon. Gasoline in Juneau was up to $2.97 a gallon for the basic unleaded grade at the Douglas Depot.

"Once the prices go up here, they don't go back down," Simons worries.

Most oil companies are pointing to the devastation caused by Hurricane Katrina as the reason for the spike, though critics nationwide are asking for more proof while being suspicious of disaster profiteering.

Fuel suppliers in Juneau say business is bad as they try to stay close to the national average to be competitive.

"I'm the first one to throw a fit," said Brian Olson. He is the Southeast Alaska vice president of petroleum wholesaler Delta Western.

According to AAA, the national average for basic unleaded gasoline is $2.95, an increase of more than $1 from last September. Compared to that figure, Juneau's prices are not so bad, said Jeff Hansen, manager of Taku Oil Sales.

"Quite honestly, prices could be a lot higher here," Hansen said.

Taku Oil Sales, which operates two gas stations in Juneau - the Douglas Depot and Taku Fleet Fuel - has the highest prices in town because Hansen just bought a new shipment of petroleum that cost extra at the refineries in the wake of Hurricane Katrina.

Other pump stations are still using fuel bought prior to the storm. Olson suspects gas prices will remain high in Juneau as stations will buy their next shipments soon at current high prices and continue to sell the product for several weeks until more fuel arrives.

Pumps in Haines and other smaller communities selling fuel at prices 50 cents or more beyond Juneau's are coping with high overhead and low sales, Olson explained.

"It costs the same to run a gas station, no matter if you are selling 10,000 gallons or 50,000 gallons," he said.

Hansen said he raises prices at his pumps when supply starts to run low. He doesn't want to run out of fuel before his next shipment arrives.

"As a businessman, I'm in a tough position," he said.

Suppliers such as Hansen and Olson are also hit by surcharges on the fuel it takes to tug barges to Alaska and truck it to the stations, they said.

A larger story may lie ahead as to whether oil companies are getting rich off the current spike. California's attorney general announced he will subpoena the companies' financial records to review profit margins and compare them to other quarters.

According to the U.S. Department of Energy, crude oil prices affect 43 percent of gasoline's price, while federal, state and local taxes make up 31 percent. The rest goes to the refineries and distributors.

On Tuesday, crude oil sold on international markets for a high of $63.33 a barrel and North Slope oil was selling at $61.11, a drop from the Aug. 30 high of $70.

• Andrew Petty can be reached at andrew.petty@juneauempire.com



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