Posted on 03/09/2004 12:35:27 AM PST by sarcasm
OAKLAND, Calif. — Later this month, gas prices will almost certainly eclipse the record for the highest average price per gallon in U.S. history. Then, if analysts are right, they will go even higher.
Most years, the discussion about summer price increases would still be months away. But this year, it has arrived even before the last snow has melted. The reasons range from the inscrutable fancies of the world's pre-eminent oil-producing cartel to Clinton-era environmental policies only now taking effect.
Each provides an indication of where gas prices will go — and none provides much hope for this summer at the pump. In small ways, the prices already are affecting costs that consumers pay for services, such as deliveries from the local flower shop. But the longer the rise continues — and analysts see no end in sight — the more it becomes a drag on the still-stumbling economy, as well as a wrench in the gears of President Bush's re-election campaign.
The average retail price of gasoline climbed 2 cents last week to $1.74 per gallon, the Energy Department said yesterday, about a penny shy of the highest price since the department began collecting data. Gasoline was most expensive on the West Coast, where it averaged $2.026 per gallon.
"It's a true bread-and-butter thing," said Del Ali, an independent pollster in Washington. "If gas prices are high, it's a negative for Bush, and there's no way you can spin that off."
With the economic recovery still not producing jobs, it could be another issue to anger voters. "One of the fascinating things right now is that you have economic news of a recovery, but nobody feels it," Ali said.
President Carter was held accountable for the energy crisis of the late 1970s and then defeated by Ronald Reagan in 1980.
But in truth, there is little a president can do.
No one factor is to blame for the spike in gas prices. The Organization of the Petroleum Exporting Countries (OPEC) has pledged to cut supply April 1. The move comes at a time when U.S. oil companies are maintaining low reserves to cut costs. Rocky U.S. relations with Venezuela, a major oil exporter, have only heightened the unease.
New regulations play a crucial part, as well. As of Jan. 1, refineries of U.S. gasoline had to produce fuel with less sulfur, to comply with a law passed in 1999. Next year, acceptable sulfur levels will drop further, and there could be "a couple years of higher prices" before more refineries come online to meet the need, said Aaron Brady, an oil analyst at Energy Security Analysis in Wakefield, Mass.
The greatest test, however, will come later in the season, when refineries shift to making their summer blend. California and several states in the Northeast have banned the use of the additive MTBE, which can contaminate groundwater if it leaks out of containers. These states mandate the use of gasoline with ethanol as an additive. Ethanol is more volatile, so this blend takes longer to make — meaning refineries will produce less, lowering supplies for the entire nation. The question is, by how much.
"That's going to be the moment of truth," Brady said.
For his part, Jim Wotring already has had a moment of truth. Normally, his Los Angeles-area delivery service lowers its prices from $7.95 to $6 after Valentine's Day. Not this year, says the store manager at Jenny's Flowers and Gifts, because of gas prices.
Some consumers already are set to rebel. E-mail chain letters calling for boycotts of the largest gas companies have begun to circulate. Perhaps the greater concern for California, though, is that summer travelers might skip long car trips altogether.
"It's going to bring a change in consumer attitudes," said Jack Kyser of the Los Angeles Economic Development Council. "We're very nervous about the tourist season."
Tracy Moorish of San Francisco, for one, still plans to travel this summer — but on wings rather than wheels. At a filling station, she confesses that gas prices have changed her plans. A cross-country drive to Florida is out; a plane flight is in. "I did not expect the high prices now," Moorish said. "I thought it was going to go up in the summer; it's kind of a surprise it has gone up so soon, and it is not even spring yet."
Information on average retail gasoline prices was provided by The Associated Press.
This is a misleading statement.
Although the energy crisis did occur on Carter’s watch and he was defeated by Reagan I do not believe that the former lead to the later.
More likely it was Carter’s mishandling (the greatest of Carter’s many failings) of the Iranian Hostage crisis that lead to his defeat at the hands of Ronaldus Magnus.
When I started driving in 1977 the price of regular was $ 0.58 per gallon.
It is my guess that that this would be pretty close to $2.00 per gallon in today’s dollars.
This article is slanted against Bush. I wonder why.
The writer seems to be trying to suggest that the price of gas is going to prevent Bush’s reelection.
(1) Unless your car burns road tar, forget the negative impact of reduced oil supplies from Venezuela.
(2) If you boycott the gasoline products from all the major oil companies, you stop driving. There are no mom and pop refineries.
(3) When refineries gear up for summer gasoline production there will be less jet fuel produced, and airplane fares will reflect the increased demand.
(4) American oil companies are maintaining low reserves because the oil reserves are not there.
We are running out of oil in the lower forty-eight states, and the cost of rank wildcatting is prohibitive for the dollar return on the investment, in large part due to increased costs associated with safety and environmental concerns reflected in a legal system run amuck with ridiculous law suits.
(5) Environmental concerns have stymied the construction of new refineries to alleviate the shortages of energy products.
Only those refineries belonging to the major oil companies who were "grandfathered" past the clean air regulations can turn a profit which is attactive to investors.
(6) Iraq is our ace in the hole for increased oil supply on the world market and a corresponding easing of overall energy costs.
The Bush Administration knows this, and so do the terrorists who are keeping the country in turmoil.
As long as this country is fixated on the liberal dogma of a pristine environment to the detriment of economic progress, we will continue to pay the price for that luxury.
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