Causes of Rising Fuel Prices ID’D

By Jim Szymanski, The Olympian, Olympia, Wash.

Apr. 18–On a day when Olympia-area prices for regular gasoline set yet another record, the state Attorney General’s Office reported Thursday that such price increases were the result of crude oil costs and increased demand, not price manipulation by oil companies.

The Attorney General’s Office just completed a yearlong investigation of gasoline prices from 2000 to this year.

Olympia-area prices for regular unleaded gasoline reached a record $3.60 a gallon Thursday; the record for diesel fuel was set the day before at $4.34 a gallon, AAA-Washington reported. A year ago, regular unleaded sold for $3.13 a gallon while diesel was $3.05, according to AAA.

Each northwest driver reduced the amount of gasoline purchased in an average week by about a gallon from 1999 through last year, a study by a Seattle think tank reported Thursday.

“In the face of higher prices, we’re taking steps to downshift our gasoline consumption, and it’s paying off,” said Clark Williams-Derry, author of the fuel conservation report for the Sightline Institute, a Seattle sustainability think tank. The finding of a per capita drop in fuel consumption came after review of federal and state gasoline sales data for Washington, Oregon and Idaho, Williams-Derry said.

Lower fuel consumption, even if only slightly less, benefits climate and air quality, Williams-Derry said. He found that during his study period, weekly gasoline sales in Northwest states declined from 8.7 gallons a week to 7.8 gallons per capita.

Drivers who sold sport utility vehicles to buy more fuel-efficient cars and others who switched to riding public transportation, drive slower or have shortened their commutes to work, all have contributed to the per capita drop in fuel consumption, Williams-Derry said.

Because of population growth in the Northwest, demand for gasoline has remained steady even with the per capita drop in consumption, he said.

A sampling of Olympia drivers Thursday showed a wide range of fuel consumption, from less over time to more.

“You can see my carbon footprint from outer space,” said Nick Shellman, an Olympia stagehand whose work often takes him to Tacoma and Seattle. He estimated that he spent $2,500 last year on gasoline for his commutes.

John Bell, on the other hand, who was filling up at a downtown Olympia Shell station, said rising gasoline prices have forced him to drive less.

“I had to give up fishing last weekend,” said Bell, who passed up a fishing trip to the Skookumchuck River. “I just can’t fish as much as I would like anymore.”

State Attorney General Rob McKenna’s investigation concluded there was no illegal conduct driving the price of gasoline in Washington state. Instead, the state says a variety of factors play into the price at the pump, including wholesale prices and transportation costs, along with worldwide demand and the cost of oil.

University of Washington economist Keith Leffler, who analyzed price data for the study, said Washington consumers have to look outside of the state to find the reasons for higher pump prices.

“The West Coast is a fuel island, separate from the rest of the U.S. domestic market,” Leffler said in a statement. “So when local supplies aren’t sufficient, petroleum distributors start searching as far as Finland and Saudi Arabia to meet demand.”

According to the study, crude oil costs used to account for about 40 percent of retail gasoline prices in Washington. But now, oil costs account for about 65 percent of the price.

The Associated Press contributed to this report.

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