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03-18-04 Local gas prices may climb to $2

By Shelley Grieshop
sgrieshop@dailystandard.com

A tight gasoline market is responsible for the continuing spikes in prices at the pump locally and across the nation, oil officials say.
   The lack of oil surpluses nationwide combined with increasing demands for gasoline in Asia have caused the ongoing rise in prices and even gasoline shortages in Florida.
   “If you think you’re angry about the prices now, wait until you don’t have any gasoline,” said Terry Fleming of the Ohio Petroleum Counsel in Columbus.
   People living in the Florida panhandle region last week were turned away from gasoline stations that ran dry, according to the AAA Automobile Club. Motorists in other states such as California, Nevada and Hawaii have paid more than $2 per gallon for gasoline in recent weeks.
   Fleming said he doesn’t believe the Grand Lake St. Marys area is headed for a gas shortage, but “I just don’t know,” he added. “You might see $2 per gallon, too. It’s tough to predict. Factors like local competition and the number of gas stations in each market area, all play a part.”
   The U.S. gasoline supply is based on a “minute-too-late” delivery system, according to Tom Kloza, an analyst at the Oil Price Information Service. Americans drive more in the summer months than the winter months, and that fact will put an upcoming strain on the relatively thin surplus at hand, Kloza said.
   The average price per gallon for regular gasoline locally is $1.74, following a random survey this morning of 17 area gas stations. The highest — $1.79 — was found at several stations in Coldwater, Celina and New Bremen; Hemmelgarn Marathon in St. Henry once again posted the cheapest price per gallon at $1.63.
   The statewide average this morning, according to AAA, was $1.66 per gallon; the nationwide average was 6 cents higher.
   The number one reason for the most recent price hikes is the drop in production of crude oil by 1 million barrels per day — a decision made three weeks ago by the Organization of the Petroleum Exporting Counties (OPEC), Fleming said. China has increased its activity in the free market, which in turn has increased their demand for oil products by 30 percent from last year, he added.
   “They’re apparently throwing away their bicycles for automobiles,” he added.
   U.S. oil stock market prices are at a 14-year high, analysts say. Crude oil closed Wednesday on the New York Mercantile Exchange at $38.18 a barrel, the highest since October 1990. On Wednesday, the price peaked to $38.85 during trading, a level not reached since it briefly neared $40 per barrel a few weeks before the start of the Iraq war a year ago.
   Other reasons for the slowing down of oil production was a recent disruption and temporary shutdown of the Mississippi River and the Gulf of Mexico due to a deadly collision of two large boats, continuing turmoil in oil-producing countries Venezuela and Nigeria, and the conversion of gasoline from winter to summer mixes in refineries across the country, Fleming explained.
   “People don’t realize there aren’t that many refineries left in the United States,” he said. “The last refinery was built in this country in 74, and we’ve lost probably 40 (refineries) due to strict EPA restrictions.”
   — The Associated Press contributed to this story.

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