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Gas Prices on the Rise Once Again

Posted on: Monday, 3 April 2006, 15:00 CDT

By BILL TROTTER; OF THE NEWS STAFF

BANGOR - The local prices of gas may not have crossed the $3 barrier that caused motorists so much angst last September, but they have taken a leap from the levels they were at only a month ago.

In the past couple of weeks, prices in the Bangor area and eastern Maine have gone up by around 25 or 30 cents.

According to an informal survey, only a few Bangor fuel stations were selling their cheapest gasoline Friday for less than $2.50 a gallon and several were up near $2.70. In mid-to-late February, most fuel stations in the Bangor area and in eastern Maine were selling regular gas for between $2.20 and $2.30 a gallon.

Jamie Py, president of Maine Oil Dealers Association, said Friday that there frequently is a rise in prices during seasonal changeovers in fuel production. He also said that, as always, international politics and the skittishness of market speculators also figure into the wholesale price of motor fuels.

"You have the ayatollah sneeze, which causes crude [oil] prices to move up," Py said.

The standoff between the United Nations and Iran over Iran's nuclear program, violence targeting Nigerian oil infrastructure, and comments from Venezuela's oil minister about ExxonMobil no longer being welcome in his country have been blamed in part for high oil prices. And lingering damage from hurricanes Katrina and Rita last fall still is affecting production among Gulf Coast oil industry facilities.

This past week the price for a barrel of oil on the New York Mercantile Exchange rose more than $3 to close to $67. Some analysts have said prices could keep rising to $70 a barrel, and to above $3 at the pump, before the summer is over.

According to AAA, the average nationwide price for a gallon of regular gas is about $2.50, or 37 cents higher than it was at this time last year.

Py said sustained prices over $3 a gallon could have implications this summer for Maine's tourism industry. He added, however, that tourists aren't likely to change their driving plans if they are faced with spending only a few dozen more dollars on fuel.

The price increase also is due in part to a changeover in the type of fuels being refined, according to Py. Gasoline with MTBE, an additive aimed at making fuel burn more cleanly, is being phased out in other states in the Northeast because it has been turning up in groundwater supplies.

This changeover is not affecting Maine directly because there is a lot of MTBE-treated fuel in Maine, Py said, but it is creating a regional perception that the supply of gasoline is decreasing. Any changeover such as the phasing out of MTBE, the seasonal transition from winter blends to summer blends of fuel, or the seasonal switch by some refineries' from heating fuel to gasoline tends to have at least a temporary affect on prices, he said.

After climbing to their highest levels in seven years last month, U.S. gasoline stocks have fallen nearly 10 million barrels in the past four weeks, analysts have said - a trend many expect to continue for several more weeks as refiners undergo seasonal maintenance work.

Beth Nagusky, head of Maine's Office of Energy Independence and Security, attributed the long-term increase in gas prices to growing global demand, less competition resulting from mergers, and political instability in oil-producing countries. She said fossil fuel supplies are not increasing as quickly as demand and that the best solution is to decrease demand by coming up with alternative energy sources.

"That's about the only thing we have control over," she said.

According to Mainegasprices.com, a Web site where consumers post retail fuel prices from their communities, there were five Bangor gas stations on Feb. 22 that were selling their cheapest gasoline for less than $2.25. On Friday, there were only three Bangor stations with fuel for less than $2.50 a gallon, the Web site indicated.

Source: Bangor Daily News

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