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Gas Prices Again Being Pumped Up

Posted on: Thursday, 12 January 2006, 00:00 CST

By Pam Dawkins, Connecticut Post, Bridgeport

Jan. 12--Gas prices seem to have settled in to a pattern of steady increases in recent months, after an all-too-brief time of declines, but the reasons, and the outlook for the near future, depend upon whom you ask.

AAA cites demand hikes due to a strong national economy, while a spokesman for a gasoline dealers' group blames the big oil companies.

Meanwhile, a spokesman for an association that represents oil companies said threats of production cuts from Iran and Venezuela sent crude oil prices higher, pushing gasoline up at the retail level.

"Certainly, it's going to be a year of price volatility," Fran Mayko, spokeswoman for the AAA affiliate Connecticut Motor Club, said Wednesday.

According to AAA, the average price for a gallon of regular unleaded gas averaged $2.44 Wednesday morning in Connecticut. The average in the greater Bridgeport region was $2.48, while drivers in the New Haven area paid an average of $2.43. Nationally, the average is $2.33.

A month ago, Connecticut drivers paid an average of $2.21 per gallon, while the average in the Bridgeport area was $2.27 and, in New Haven, $2.20.

Michael J. Fox, executive director of the Gasoline and Automotive Service Dealers of America, representing franchise and independent station owners, said he is writing a letter to Gov. M. Jodi Rell, asking for an investigation of the oil companies.

"We are totally frustrated," Fox said.

According to Fox, the market price per gallon on the barges coming into New York harbor are the same as they were in October. Then, he said, oil companies raised prices to retailers by 20- to 30-cents per gallon. Gas retailers, according to Fox, haven't seen that hike again, despite the same market price.

He claims this is because, after rapid increases in the wake of hurricanes Katrina and Rita, officials are keeping a closer eye on prices. But, Fox said, the market is dictating higher wholesale prices, so he expects his members will see that 30-cents-per-gallon increase passed on to consumers at any time.

Steve Guveyan, executive director of the Connecticut Petroleum Council -- an oil industry trade association -- said the oil companies only control about 15 percent of the world's crude oil. The oil-producing countries that control the rest are driving up crude prices, he said, which in turn pushes other prices higher.

The price for a barrel of crude closed up 57 cents Wednesday, to $63.94 in trading on the New York Mercantile Exchange. In mid-November, crude traded for about $57 per barrel.

Iran and Venezuela, Guveyan said, have each made statements about cutting back on production, which is fueling speculation by oil traders. "The market is very, very reactive to the price of crude oil," he said.

Gene Guilford, executive director of the Independent Connecticut Petroleum Association, agreed that recent gas price hikes are related to higher crude prices. Guilford's group represents independent gas station owners.

However, he said, nobody can see why crude prices are higher. The effect of the hurricanes on production has mainly passed, he said, and growth in the Russian and Chinese economies -- and the resulting demand for oil -- have already been factored into prices. And, "nobody has decreased production," Guilford said.

But while Fox agreed with AAA's prediction of continued retail gas price hikes, which the organization said will come before the traditional increases that reflect mandated gas additives in the spring and more driving during the summer, Guilford didn't.

"I see absolutely nothing, nothing, in any fundamentals of the oil industry that would lend itself to that evaluation," Guilford said, adding he has "absolutely no idea" what will happen with prices.

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Source: Connecticut Post

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