Summer days are still months away, but summerlike prices already have arrived at the region’s gas stations.
And unless market conditions change dramatically, fuel prices could set new records for the second year in a row. Some analysts are even predicting gas prices could rise to $2.50 a gallon this year.
"Anything could happen, but the conventional wisdom among most of the oil traders is we’ll see prices higher than last year," said Fred Rozell, retail pricing director with the Oil Price Information Service.
As of Tuesday, the average self-service price for a gallon of regular unleaded gasoline was $1.70 in the Seattle-Bellevue-Everett region, according to AAA.
For comparison, the average price of unleaded fuel in the middle of last August, traditionally a busy driving month was $1.68.
Across Snohomish County, motorists on Tuesday could find prices ranging from below $1.69 a gallon in Lynnwood to $1.80 or more in Lake Stevens and other outlying areas.
The latest average price for the Puget Sound area is nearly 5 cents above the average from exactly a year ago, when prices increased quickly as the start of war in Iraq looked imminent. Two years ago, the local average price during Presidents Day weekend was just $1.23 a gallon.
But the past two years have shown that motorists can’t count on prices to bottom out in January and February like they used to, said Janet Ray, a spokeswoman at AAA’s Western Washington office.
"It appears that prices are going to fluctuate much more than they used to," she said.
Crude oil futures closed above $35 a barrel Tuesday, about the same price they were last year at this time.
That relatively high price for crude is blamed on higher demand for heating oil because of cold winter weather on the East Coast and planned production cuts by the Organization of Petroleum Exporting Countries.
Other factors helping to push up prices range from new environmental standards for gasoline in this country to an increased thirst for oil as the world’s economy improves.
There’s also the factor that Rozell calls "petronoia" — oil traders’ nervousness about how much demand for fuel will increase during the busy driving months this summer. That’s especially acute this year because the nation’s reserves are low.
Whatever the reason, Dan Ketzel is dreading further price increases. The manager of two Union 76 stations in Lynnwood has kept his prices steady at just below $1.70 for the past three weeks, even though it has cut into his usual profit margin. It’s necessary, he said, to compete with neighboring stations.
While the large oil companies reported healthy — in some cases, record — profits for 2003, Kestle said last year’s high prices hurt business at his stations.
After breaking records earlier in the year, the region’s average gas price hit an all-time peak of $1.97 during Labor Day weekend. The going rate for fuel in the county was $2 or more.
"It scares me, of course, to think we may go higher than last year," Kestle said.
But there’s a good chance that will happen, said Bill Bellman, executive director of the Washington Oil Marketers Association. Attending a West Coast oil marketers meeting in Las Vegas this week, he said nothing’s giving him reason to think that prices will go down this summer.
"There’s a real concern here," he said from the meeting.
Rozell and Ray agreed that new records could be set, though neither wanted to speculate on recent predictions from people such as Tim Hamilton of the Automotive United Trades Organization, an Olympia lobbying group for independent service station owners, that prices could top $2.50 or more a gallon.
AAA reported Tuesday that the average price for unleaded already was above $2.07 a gallon in Hawaii and $1.90 in California. Oklahoma had the lowest average price, $1.49.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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