Gas prices could hit $2.50 in some
cities
Source: Florida Today
Publication date: 2001-03-07
Arrival time: 2001-03-08
Gas prices could hit $2.50 in some cities
By Sara Nathan
Gannett News Service
Consumers near major cities could see spikes in
gas prices this summer. But drivers around
Milwaukee, Chicago and California cities are likely
to experience the sharpest swings because of
demand for reformulated gas.
Gas prices could surge as high as $2.50 a gallon in
those areas, said Fred Rozell, retail pricing director
at industry consulting group OPIS Energy.
"Get rid of your SUVs while you can," he said.
Gas stations in most of the Northeast and areas
around Milwaukee, Chicago, St. Louis, Houston,
Dallas, Los Angeles, San Diego and Sacramento
metro areas that consume a third of the nation's
gasoline must sell a summer blend of reformulated
gasoline beginning June 1 to meet clean-air
regulations.
If there are no problems with refineries or pipelines
that supply the areas, California and the Midwest
should have ample supplies. But there's little room
for error, and price increases in those areas could
push up prices elsewhere.
Gas prices in Chicago and Milwaukee spiked above
$2 a gallon last summer after retailers began selling
reformulated gas, pipeline problems cut supplies to
the area and crude oil prices rose.
"The opportunity exists for what happened last
summer to happen again, and it may be even
worse," said William Fleischli of the Illinois
Petroleum Marketers Association.
Fleischli says he's already worried, because a
refinery that supplies 9 percent of the area's
gasoline recently announced it will close this
summer, rather than upgrade its facilities to comply
with environmental regulations.
Most of the areas that sell reformulated fuel use gas
blended with methyl tertiary butyl ether, or MBTE.
But gas stations in Milwaukee and Chicago will sell
gas blended with ethanol, a corn-based alcohol.
California will begin phasing out MBTE and
replacing it with other additives such as ethanol, but
California uses a different formula than the
Midwestern cities.
Any refinery or pipeline problems could cause
prices in California to spike this summer. But a
greater risk is that rolling electricity blackouts could
shut down refineries for several days at a time, said
Gordon Schremp, senior fuel specialist for the
California Energy Commission.
It would take refiners in Texas or the Virgin Islands
that can make gas to California's specifications
more than three weeks to produce and ship fuel
there; in the meantime, gas prices could
surge, he said.
Refiners nationwide, which are operating at 95
percent of capacity, may not be able to produce
enough gas, especially reformulated gas, to meet
demand.
"Our daily use of gas is outstripping what we can
make, so if we have a heavy driving season, we just
draw down supplies," said John Kneiss of the
Oxygenated Fuels Association, which represents
refiners that use MTBE.
Nationwide, the Energy Department expects regular
gas prices will average $1.48 a gallon between April
and September. That's slightly lower than last
summer's average of $1.53 -- a 15-year high.
Prices down, for now
Unleaded gasoline, average monthly prices (cents
per gallon, including taxes):
--- March 2000.............$1.54
--- March 2001.............$1.48
Source: Energy International Administration |
