$3 a Gallon Gas Creeping Back: Soaring Cost of Oil Fuels Latest Increase
By Larry Sandler, Milwaukee Journal Sentinel
Apr. 19–As oil prices hit an all-time high Tuesday, Milwaukee-area gas stations steered ever closer to the $3-a-gallon mark.
Some stations are charging as much as $2.99 a gallon for regular unleaded gasoline, according to spotters for both MilwaukeeGasPrices.com and GasPriceWatch.com.
The average price stood at $2.82 a gallon statewide, up 53 cents from this time last year, and at $2.88 a gallon in the Milwaukee area, up 59 cents from a year ago, according to AAA’s Fuel Gauge Report. An informal Journal Sentinel survey of 10 area gas stations put the average at $2.91 a gallon.
“People are wondering, ‘Where will it stop?’ ” said Bob Bartlett, Wisconsin Petroleum Marketers & Convenience Store Association president.
Average gas prices haven’t topped $3 a gallon since last fall, after Hurricanes Katrina and Rita devastated Gulf Coast oil production. The highest statewide average recorded AAA was $3.12 a gallon on Sept. 4.
A major factor in the latest increase is the soaring cost of oil, which closed at a record $71.35 a barrel for light sweet crude on the New York Mercantile Exchange. Traders were nervous about growing tensions between the United States and Iran over Iranian nuclear ambitions and rebel attacks on Nigeria’s oil facilities, said AAA national spokesman Mantill Williams.
The crude oil price alone translates into about $1.70 of the price of a gallon of gas, and state and federal taxes add another 51 cents, said Erin Roth, executive director of the Wisconsin Petroleum Council, which represents big oil companies. Add the costs of production and distribution, and the wholesale cost of gas is already $2.80 to $2.85 a gallon the time it reaches the pumps, plus another 5 or 6 cents in markets that use reformulated gas, such as the Milwaukee area, Bartlett said.
Also at work are seasonal price factors, such as refineries shifting from winter-grade to summer-grade fuel, and requirements to phase in ethanol in some parts of the nation that don’t use it now. Further increases are likely before Memorial Day weekend, the start of the summer driving season, Williams warned.
Roth said consumers could help drive down gas prices driving less and choosing more fuel-efficient vehicles. But Autumn Williams said she’s already following that advice.
“I think it’s ridiculous,” Williams, 21, of Milwaukee, said of the $2.99 a gallon she paid for regular unleaded gas at the Citgo station at N. 27th St. and W. St. Paul Ave. “They haven’t given people an explanation why gas is so high. I try to conserve gas as much as possible and get my errands done all at once. But this is the third time I’ve filled up this week.”
Another driver at the same station blamed oil companies.
“I hate it,” said Dan Nathan, 27, of Milwaukee. “They’re gouging. I like to go to Madison once in a while, and it makes the trip a whole lot harder. When you hear about the energy companies reporting record profits, it makes you mad. But, I suppose, the alternative is I don’t have to drive.”
On Tuesday, state Attorney General Peg Lautenschlager added her voice to Gov. Jim Doyle’s in urging the Legislature to pass a measure to outlaw price gouging. Both Lautenschlager and Doyle say prosecutors would target gas price gouging if the legislation is adopted.
Jesse Garza of the Journal Sentinel staff contributed to this report.
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