Gasoline, heating oil prices skyrocket Experts predict even higher costs

September 26, 1990|By Jon Morgan | Jon Morgan,Evening Sun Staff

Most of the customers filling up at the Rosedale Texaco are the same, polite, reasonable people they were before the specter of Saddam Hussein invaded their gas tanks.

But, with increasing frequency, a customer marches sternly to the cashier's window and throws the money down in a silent rage.

"They look at you like you are crazy," says owner Edward Unitas. A 20-year veteran of the business, and a survivor of two previous energy crises, Unitas says he's never seen anything like this.

Gasoline prices in Maryland are at all-time highs and experts are talking about $1.60 and $1.85 in the future. Heating oil has not been far behind, with some predicting record prices of $1.50 to $1.70 a gallon as soon as next month. Even propane gas, used by some homeowners and businesses for heating and cooking, could surpass historic levels established during last December's cold snap.

"I'm worried about my people," said Mary D'Ambrogi, director of Catholic Charities Oil, a non-profit cooperative that sells heating oil to the poor.

"They are going to have to make choices between food and oil," D'Ambrogi said. Her agency is selling oil for $1.11 a gallon, compared with an average of 92 cents last winter during a period that included December's short-lived price of $1.26. Unusually cold weather in the Northeast and resultant spot shortages were blamed for those increases.

Charles Muller, general manager of Cook's Tank Line, a heating oil distributor, said, "I've never seen prices of oil increase this much in September."

His company is trying to keep the price down for its annual September sale. It is charging $1.10, versus a prevailing price of more than $1.20 in the area and the all-time record of $1.40 last December.

Unlike December, supplies of oil and other petroleum products appear to be adequate, according to Donald Schroeder, associate director of the Maryland Petroleum Council, a trade group representing oil companies.

"We have not seen any evidence of shortages," Schroeder said.

Natural gas prices have been largely unaffected by the Persian Gulf situation, according to a spokeswoman for Baltimore Gas & Electric. The utility uses some oil to generate electricity, but the earliest it could respond to higher oil costs with a special "fuel rate adjustment" on customers' bills is next January. The adjustment would be based on average oil prices over several months.

Unitas, the owner of Rosedale Texaco, said the high pump prices have driven customers to buy less gasoline, often getting a few gallons at a time instead of filling up. His volume is down 20 percent over what it was before Iraq's Aug. 2 invasion of Kuwait.

"It's getting to the point now where we're going to have to lay people off because we can't afford to keep them on," Unitas said.

Arthur E. Price, director of the Motor Vehicle Fuel Tax Division of the state comptroller's office, said many stations are complaining of lower profits and volumes related to price increases from their suppliers.

Price said one expert testifying at a hearing in Annapolis this week predicted, on the basis of current spot-market wholesale prices in New York, that heating oil prices in Baltimore could hit $1.70 in a few weeks.

He said prices of $1.50 would not surprise him.

Motor fuel costs for consumers in Maryland are still lower than the national average, something that Price attributes to state laws that allow oil companies to own, but not operate, gasoline stations.

Nationwide, a gallon of no-lead regular is going for an average of $1.31 at self-serve pumps, according to the American Automobile Association. That is near the $1.388 record reached in 1981.

Another survey, by the Lundberg Letter, an industry newsletter, said a new record was established last Friday: $1.3835, versus the previous record of slightly less than $1.38 hit in March 1981.

The statewide average was $1.232 according to the most recent survey by the AAA-Maryland, conducted on Sept. 14. An informal poll taken yesterday by The Evening Sun of 10 randomly selected gas stations in the metropolitan area revealed an average of $1.254 for unleaded regular. The actual prices ranged from $1.209 to $1.339.

Propane prices move up or down with the price of crude oil costs because the gas is a petroleum byproduct. A gallon of propane is now selling for 60 cents, nearly double the 32 cents charged before the invasion of Kuwait, said Darsh Patel, comptroller of United Propane.

"The situation is not good right now," she said.

Peter Beutel, an oil analyst with Pegasus Econometric Group Inc. in Hoboken, N.J., agreed, saying, "This is not good news for the consumer. . . . The problem with energy is it permeates the economy like a ripple in a pond."

Not all analysts believe oil will stay as high as it is. They say that too much war hysteria may have been built into the market, that Iraq's ability to take out Saudi Arabian oil facilities may be overestimated, and that replacing a bombed oil well is much simpler than replacing a bombed factory.

Others, including Beutel, say crude oil at $40 a barrel seems inevitable in the near future. Some estimates have put oil at $60 to $65 in the event of war.

"What it means, I'm afraid, in solid terms, is the consumer is probably going to be lucky to find $1.35 gasoline, and probably a lot more of us are going to find $1.60 to $1.85 gasoline," Beutel said. "We're probably going to see the average consumer pay 50 percent more for heating oil than he did last year."

Wire services contributed to this report.

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