July gas increase highest in 3 years BIG JUMP AT THE PUMP

August 12, 1994|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

Fueled by rising demand and market jitters over Nigerian oil production, gasoline prices in Maryland have jumped more than a nickel a gallon in the last month, the sharpest increase in three years, the Maryland Division of the American Automobile Association Mid-Atlantic reported yesterday.

The rising prices, which have been building steadily since March, may go up again in October when the winter heating season begins, industry officials said, and could continue to move up steadily next year as the Japanese and European economies improve.

"We may go back to a situation where all of the world is moving back pretty fast and that would push up crude prices," said Theodore R. Eck, chief economist for Amoco Corp., a major oil company based in Chicago.

According to its latest Maryland AAA survey of 30 stations, the average price for unleaded regular gasoline at a self-service pump jumped 5.3 cents in the last four weeks to $1.166 a gallon -- a 5.1 percent increase. Prices for higher grades of gasoline rose at a slower pace, with a 3.7 percent increase for mid-grade gasoline and 3.9 percent for premium.

That was the largest increase since May 1991 when the Maryland AAA survey showed a 5.6 cent increase to $1.117 for regular unleaded gas at self-service pumps.

The increase in state pump prices, nevertheless, lagged the wholesale market. The Commerce Department reported yesterday that wholesale gasoline prices rose 8 percent in July.

In Maryland, prices for unleaded regular have increased by 12.3 percent since March when the average for regular self-serve hit a low of $1.038 a gallon, according to the Maryland AAA.

The latest survey, conducted Wednesday, found prices in Maryland ranging from $1.849 for premium gas at a full-service pump in Frederick to $1.079 a gallon for unleaded regular at self-service pumps in Baltimore and Queenstown on the Eastern Shore. The survey excludes Prince George's, Montgomery and Charles counties.

The rapid increase in the last month, said one local gas station operator, has kept him busy changing signs.

"I think it was going nuts," said Paul D. Russell, the owner of the Cross Keys Exxon station at Falls Road and Coldspring Lane in Baltimore.

In the first week of August, Mr. Russell said he changed his price signs three times, as his price for regular unleaded gas at the self-service pumps rose a nickel to $1.149 a gallon. But Mr.

Russell said he did not hear any complaints from customers.

Joseph M. Coale, a spokesman for the Baltimore-based Crown Central Petroleum, said Crown had raised prices to its 400 dealers -- including 100 in Maryland -- by 5.5 cents in the last month.

While gas prices normally go up during the peak summer vacation months with rising demand, this year a five-week strike by Nigerian oil workers has added to the run-up.

Analysts estimated that the strike, now in its sixth week, has cut as much as 25 percent of Nigeria's 2-million-barrel a day output. Nigeria is the fifth-largest supplier of oil to the United States.

Resulting market anxiety, along with seasonal demand, has pushed the price of crude oil from $14 a barrel in March to about $20 at the beginning of August. Currently oil is trading at around $19 a barrel.

If the Nigerian strike spreads and production falls further, it could cause "prices to pop up," Mr. Eck said.

Mr. Eck said crude prices could rise by $2.50 a barrel in October as the winter heating season begins. This could push prices at the pump up about 5 cents a gallon, he said.

Looking to next year, Mr. Eck said prices might continue to climb as demand increases in Japan and Europe as they recover from recessions. "It would mean higher prices for everybody," he said, adding that prices for other commodities would also be boosted by prosperity.

However, according to Cheryl J. Trench, executive vice president of the Petroleum Industry Research Foundation, other forces -- such as the re-entry of Iraqi oil exports -- could moderate market pressures.

"It isn't an inexorable upward push," she said.

As an example, she said, analysts had not anticipated the drop in prices at the end of last year when additional oil from the North Sea came on the market.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.