Oil cuts, weather fuel gas prices

Average at pumps in Maryland climbs to $1.27 a gallon

Lower than last spring

March 22, 2002|By Robert Little | Robert Little,SUN STAFF

Reminiscent of last year's price explosion, the cost of a gallon of gasoline has shot up nearly 20 cents in the past month, to an average of $1.27 in Maryland and $1.30 nationwide.

But the pumps still charge three-fourths what they charged in the spring of last year, and energy experts say there's no reason to fear that this year's price rise will be as big as the last one.

"Gas prices are up, but there's some good news: We're lower than last year," said Myra Wieman, manager of public affairs for AAA Mid-Atlantic.

"People shouldn't be shocked," said Jerry Taylor, director of natural resource studies at the Cato Institute, a think tank. "There's no particular reason to believe that gasoline prices are going to shoot up to $2 a gallon this year."

According to AAA, the average price for a gallon of regular in the Baltimore area was $1.25 yesterday, up more than a penny from the day before. In the Washington area, the average price was $1.30. One month ago, prices hovered between $1.09 and $1.15.

Warm weather is partly to blame for the increase, according to the American Petroleum Institute, an industry trade group. Demand for gasoline always increases when the outdoors beckons, and prices rise whenever demand is high.

The oil ministers in the Middle East also have had an effect, having lowered production to decrease the amount of oil on the world market and thus increase the price for each barrel. The price of crude oil - the main determinant of the price of gasoline - has been as high as $24.56 a barrel in the past week, up $3.50 in the past three weeks and up $6.60 since January.

Refineries are to switch to a cleaner-burning mixture of fuel in June, something that always causes brief fluctuations in supply. Add the political uncertainty in the Middle East and the fickle production schedules in Russia, and the result is wide swings in gasoline prices that no one can foresee.

"There are many, many factors that weigh in on this, and there's not much you can do about any of them," said Chris Kelley, a spokesman for the American Petroleum Institute. "It's nothing particularly unusual, but there's no reason to think that the volatility of gas prices is going to end any time soon."

Last year, gasoline prices shot up to more than $1.70 a gallon in Baltimore because of a similar ebbing of supply and demand. Prices fell quickly, to a little more than $1, by the end of the year but were high enough at one point to effect driving habits, gas station owners said at the time.

Atta Warraich, manager of Harbour Place Shell on Russell Street, had checked his computer for price reports once or twice a week through most of this year. Now he checks it every morning and raises prices nearly every morning. Yesterday, he added 2 cents a gallon, selling regular gasoline for $1.299.

"People should complain, the way prices have been going up so fast, but they don't," said Warraich, whose station south of downtown sells about 190,000 gallons of gasoline a month.

"Maybe it's because the economy is doing better, or the nice weather. Or maybe it just hasn't gone up enough to make a difference to people."

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