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Experts blame OPEC for soaring prices at the pump

February 17, 2000

See also: Gas guzzlers popular despite rising fuel prices

Gas prices riseBy JULIE E. GREENE / Staff Writer

photo: KEVIN G. GILBERT / staff photographer




Halfway resident Laura Hardin wants to thank OPEC for the rising gasoline prices across the Tri-State area.

Of course, she's being sarcastic.

cont. from news page

"The sad thing is they got us over a barrel. We need the gas. We're going to pay what they ask. We're spoiled," said Hardin, 37, who drives 40 minutes round-trip to work at Citicorp.

Hardin just happened to be talking to her daughter, Sarah, 13, about the escalating gasoline prices on Thursday while filling her Dodge Caravan with regular unleaded at the South Potomac Street Exxon station instead of her usual 89-octane.

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An informal survey of 27 service stations in the Tri-State area on Thursday showed an average of $1.37 per gallon for regular unleaded or 87 octane. The average price per gallon for higher octane premium gas was $1.51.

Gasoline prices have been rising since last summer, after the Organization of the Petroleum Exporting Countries decided last March to cut back crude oil production to raise prices after they'd been at a 10-year low, said Chris Kelley, spokesman for the American Petroleum Institute in Washington, D.C.

In November 1998, local gasoline prices dipped below $1 per gallon with some service stations offering regular unleaded for 89.9 cents per gallon.

The price for crude oil is slightly more than $30 a barrel now, compared with $11.50 a barrel a year ago, Kelley said.

More than half of the United States' crude oil supply comes from overseas and OPEC has gotten other countries to go along with its reduced production, Kelley said.

Kelley said the United States hasn't increased its oil production to compensate for two reasons: The low prices two years ago drove many small producers out of business and it is expensive to reopen those wells. Also, the federal government restricts oil producers from tapping into many of the nation's richest sources, Kelley said.

OPEC members will probably decide before their meeting this March to increase production, said Roger Diwan, managing director of global oil markets for the Petroleum Finance Co. in Washington, D.C.

If they do increase oil production, consumers won't see the impact at the pumps for quite a while, Diwan said.

The crude oil price may drop, but the price of another fuel component may go up, he said.

Diwan said he expects to see prices at gas pumps go up another 10 cents per gallon before stabilizing.

Gas prices are getting so high that Kathi Snyder is thinking of having her family fly to Chicago in July rather than drive.

Snyder, 39, of Hagerstown, said she has switched from supreme to regular unleaded for her Ford Taurus until prices come back down.

Truckers also are feeling pinched.

Don Bowman, owner of D.M. Bowman Inc. and its fleet of 500 trucks, said his Williamsport company is "struggling" due to increasing fuel costs.

"It creates a hardship," Bowman said.

Bowman estimates the price of diesel fuel has risen 30 cents in the past year. That's an extra cost that Bowman said he tries to pass on to his customers who, so far, have been understanding of the situation the trucking company is facing.

The average price of diesel fuel on Thursday was $1.60 per gallon, according to prices at nine Tri-State area stations. That's up from the $1.10 per gallon Cassidy Trucking was paying two months ago, said Bill McCleaf with the Hagerstown firm.

It's hard to pass on the extra fuel cost to customers when the firm is locked into rates, McCleaf said.

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