Gas and college costs soar

For three weeks, the price of gasoline in the Puget Sound area stabilized and even went down slightly. But the upward trend has returned.

AAA reported Thursday that the average price for a gallon of unleaded fuel in the Seattle-Bellevue-Everett area was $1.88, 5 cents higher than a week ago. The statewide average rose at a similar pace to $1.86 a gallon.

Expect more of the same. Demand for gasoline is expected to reach record levels this summer.

"What we’re seeing is that demand for gasoline is 4 percent higher than a year ago, while prices are running about 15 percent higher," said Dave Overstreet, a regional spokesman for AAA. "So far, we haven’t seen the prices result in a decrease in demand, which would probably help push down prices."

Earlier this week, the national average for unleaded fuel hit a record, at $1.77 a gallon.

That nationwide average likely will be at $1.81 a gallon between now and the end of June, the federal Energy Information Administration predicted Thursday. After that, prices probably will decline during the rest of the summer, but not by much, said agency administrator Guy Caruso.

He added that prices could run significantly higher in some regions of the country, including the West Coast and the Northeast. In California, the average price of regular unleaded has been above $2 a gallon for seven weeks.

Aside from higher demand for gasoline, the relatively high cost of crude oil and recently announced production cuts by the Organization of Petroleum Exporting Countries get the most blame for the rising prices.

The lack of U.S. refinery capacity also is blamed, Overstreet said. At a time when gasoline supplies are tight, any malfunction or change in refinery operations can have a huge effect on prices.

"We’re seeing a situation where that exacerbates things," he said.

Petroleum industry watchers are especially worried about Shell’s decision to close its 72-year-old refinery in Bakersfield, Calif., later this year. The Federal Trade Commission announced this week that it was reviewing that decision.

Also this week, a U.S. Senate committee held hearings on gasoline prices. Gov. Gary Locke and other Democratic governors have called on President Bush to launch an investigation as well.

Bill Bellman, executive director of the Washington Oil Marketers Association, said he’s hearing complaints from gas station owners about the prices.

"They get squeezed. Nobody wants to raise their prices on the street," Bellman said. "It’s not a pretty picture for anyone."

The American Petroleum Institute, which represents the industry, points out that in inflation-adjusted dollars, this year’s fuel prices are still nowhere near the all-time high. That was in 1981, when prices topped out at $2.77 after adjusting for inflation.

The Associated Press contributed to this story.

Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.

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