Md. braces for higher gas prices

Regular unleaded to cost about $1.49 in U.S. this summer

April 17, 2001|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Katie Burley had her hand on the pump handle but her eyes on the numbers as gasoline flowed into the fuel tank of her 15-year-old blue Volvo station wagon. After the pump stopped, she tore off her receipt.

"Oh, my God, I just spent $20 on gas," said Burley, a 20-year-old student at the Maryland Institute, College of Art, who stopped last week at the Amoco station at St. Paul Street and Mount Royal Avenue in Baltimore. She said she'll be riding her bike more this summer.

In the wake of gasoline prices that exceeded $2 a gallon last year in the Midwest, motorists are bracing for another summer of volatile prices at the pump after the Organization of the Petroleum Exporting Countries announced cuts in crude oil production this month.

Despite cuts in production, gasoline inventories could rise by the end of the summer as a result of more imports and increased refinery production, said Jay Saunders, an energy analyst with Deutsche Banc Alex. Brown in Baltimore.

"However, that's not to say you're not going to see a significant rise in retail prices in the near term," he warned. "Prices will definitely go up. ... It's just a matter of how much the market will let them. I think what you'll see this summer is people driving their smaller cars on longer trips, rather than taking their SUVs to the beach."

The U.S. Department of Energy forecast last week that regular unleaded gasoline will cost an average of $1.49 per gallon nationwide from April to September. That's a few pennies shy of last summer's national average of $1.53 per gallon.

Prices on the rise

Figures released yesterday by AAA show that the average price of regular unleaded gasoline nationwide was $1.58, 10 cents a gallon higher than a year ago. AAA conducts a daily survey of 60,000 gas stations nationwide.

In Maryland, the AAA survey showed the average price of regular unleaded was $1.56 per gallon - up 11 cents from a month ago. Maryland drivers paid a record high of $1.63 per gallon in July, according to AAA.

In the past week, prices have risen an average of 6 cents a gallon in Maryland, said Myra Wieman, public affairs manager for AAA Mid-Atlantic in Towson.

"It appears that this could be some bad news for travelers, and we haven't hit the summer peak season," she said.

The AAA survey of gasoline prices in the Baltimore metropolitan area held steady at $1.53 per gallon for regular unleaded - the same as this time last year. An informal survey of Baltimore gas stations on Friday found prices for regular unleaded at $1.55 to $1.59 per gallon.

Other factors

In addition to crude oil levels, other factors affecting prices at the pump include increased summer demand, production of cleaner-burning "summer-grade" gasoline, and unforeseen distribution problems - such as a pipeline rupture - during summer months, according to petroleum industry experts.

Analysts say rising gasoline prices affect not only commuters and weekend road-trippers, but other parts of the economy, resulting in higher costs for some goods and services.

Zack Jefferson, 58, a Baltimore cabdriver, said rising gasoline prices are akin to a salary cut.

"Compared to last year, it's $10 a day more for gas for me, since I drive every day," said Jefferson, while stopped Friday at the Hess station at Charles and Lafayette streets. "That's $300 a month out of my pocket."

Jefferson said he drives longer hours to compensate.

Some factors may help keep gasoline prices in check, said John C. Felmy, chief economist for the American Petroleum Institute, an industry trade group in Washington. Fewer than normal pipeline and distribution problems could keep costs down, as could a softening economy, he said.

"Last year, we saw very strong increases in gasoline demand because of a booming economy, particularly in the Midwest," said Felmy. "We're not seeing that this year. [Gas prices] are up about 1.5 percent over last year at this time."

Summer-grade gasoline

Environmental regulations also increase the price of gasoline in summer, Felmy said. Refiners are required to make gasoline for some states, including Maryland, that burns more cleanly and does not worsen smog.

Production of summer-grade gasoline begins in February and March, said Felmy, and contributes to lower supplies and higher prices as refineries empty their tanks and switch from making winter-grade fuel.

Some motorists, however, look at rising gasoline prices from a global perspective.

"I guess last summer when it all started, it was a little disconcerting," said Pete Ferraro, 33, while filling up his Mazda MX-3 at the Enroy station on West 41st Street in Hampden. But compared to prices in Europe, "we're pretty well off."

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