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Victoria, Texas-Area Gas Prices Fall 20 Cents

Posted on: Tuesday, 6 September 2005, 18:01 CDT

Sep. 3--Area gas prices fell 20 cents Friday, giving drivers some relief from near record high prices as they began the Labor Day holiday.

Gasoline prices rose 52 cents during the week to a high of $2.999, but fell back to $2.799 by Friday.

One area analyst said prices could drop even more in the coming week as more refineries damaged by Hurricane Katrina are returned to production.

The cost of a 15-gallon tank of gasoline fell $3 to $41.99 with the late week drop in the price.

Diesel prices remained at $2.699.

Commodity market prices dropped significantly with good news released late this week that most of the refineries damaged by Hurricane Katrina will be back on line sooner than originally expected, explained Henry Luddeke, wholesale manager with Western Petroleum, who has an office in Cuero. The price could drop some 30 to 40 cents from the record high of $2.99 that swept across Victoria and the surrounding region this week.

Calls to gasoline stations across the region found prices ranging from as high as $2.999 per gallon, to isolated cases of $2.7299 where stations bought gas at cheaper prices and hadn't yet run out.

While the price has gone down at the pump, an official with fuel retailer Speedy Stop Stores said they hadn't seen a drop in their wholesale prices yet. Earlier in the week the retailer raised prices to $2.999 not because of cost increases but to keep in step with other fuel sellers, said Mark Gresham, vice president of operations.

If the chain had remained significantly below competitors, many of whom buy gas from different sources, the retailer would have experienced a run on gasoline, he said. The cost of replacing those supplies would have forced retail prices even higher as the company would have been forced to buy fuel at its most elevated levels seen since the early 1980s.

The highest price on record was the $3.11 national average set in March 1981, if the price is adjusted to 2005 dollars.

The national average Friday stood at $2.867, up from $2.707 on Thursday, while the state average stood at $2.787, up from $2.64 on Thursday.

The Victoria area could see prices around $2.599 in about a week, Luddeke said.

Many of the refineries damaged by Hurricane Katrina will be back on line in a matter of days or weeks, Luddeke said. Only three refineries were expected to be shut down for several months instead of all 10 refineries affected by the storm as it was first feared, Luddeke said.

The federal government also eased environmental regulations that require cleaner burning fuels be used in certain areas. This allowed refineries to produce more regular gasoline to make up for the loss of production caused by Katrina, he said.

Pipeline shutdowns also kept fuel in the Texas Gulf Coast market that normally would have gone elsewhere, he said. The excess supply brought prices down, he said.

"A lot of good news came out today," agreed Doug MacIntyre, a senior oil market analyst with the Energy Information Administration. "There is news that the pipelines into the east coast are coming back a little bit quicker than had previously been anticipated. There is news that there are plans in place to restore electricity to a number of the refineries."

In addition, U.S. and European governments agreed to release more than 60 million barrels of oil and refined products from their emergency reserves, according to The Associated Press.

Light sweet crude for October delivery fell $1.88 to $67.59 a barrel in afternoon trade on the New York Mercantile Exchange. Gasoline futures tumbled nearly 27 cents to $2.14 a gallon, their first decline this week, according to The Associated Press.

The market was particularly upbeat about the announcement from the 26-nation International Energy Agency because it will bring gasoline and diesel from Europe to the U.S. market.

However, refiners are continuing to tighten allocations of fuel available to retailers, Gresham said. While Victoria stations weren't expected to run out of fuel, Gresham was concerned about such shortages in other parts of the state, he said.

The high gas prices have piqued the interest of federal and state government officials.

Texas Governor Rick Perry's Friday disaster declaration triggers stiffer penalties under the Texas Deceptive Trade Practices Act, which allows the Texas Attorney General to take more aggressive action against any business that might engage in price gouging.

"My office will aggressively pursue anyone who violates the law by exploiting victims in the wake of this disaster," Texas Attorney General Greg Abbott said in a prepared statement. That includes overpricing hotel rooms or fuel, he said.

The Texas Attorney General's office has received hundreds of calls from consumers concerned about price gouging on gasoline, according to the news release.

The Energy Department reported Thursday that more than 5,000 calls to its price gouging hotline from motorists around the country, although officials emphasized there was no way to immediately determine how many of the allegations were valid, according to the Associated Press.

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Copyright (c) 2005, Victoria Advocate, Texas

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Source: Victoria Advocate, Victoria, Texas

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