Gas prices are expected to rise

Associated Press

Just what motorists didn’t want to hear on the eve of summer vacations: Gasoline price shock is back.

With U.S. gas prices at record highs and motorists paying $2 a gallon in Chicago and California, talk from the pump to the Oval Office on Monday focused on whether prices could reach a once-unthinkable $3 a gallon this summer.

The talk came on a day when the Federal Trade Commission announced that after a three-year investigation, it found no evidence that major oil refiners violated antitrust laws in marketing West Coast gasoline.

The FTC investigation, which include wholesale prices in Washington state, began three years ago at a time when gasoline leaped from $1.07 a gallon to $1.25 in Snohomish County in a matter of days. Prices through the West spiked rapidly after a refinery suffered a mechanical failure, another caught fire and a third suffered an explosion.

They’ve remained high ever since.

There is no "magic wand that (a politician) can wave over gas prices to lower them," said White House press secretary Ari Fleischer.

The odds appear to be against another huge runup.

But the White House alluded to the possibility, saying President Bush will not act to stop any increase even if prices top that amount.

Fleischer said Bush opposes price controls and has not supported calls to repeal or cut the 18.4 cents-a-gallon federal gas tax.

"The worst may already be over, because refiners are getting caught up" with supplies, said Phil Flynn, senior energy analyst for Alaron Trading Corp. in Chicago. "The bad news for consumers is we don’t have one extra drop of gas to fall back on.

"If one more refinery goes out of service, it could have an impact on consumers of as much as 75 cents a gallon."

Drivers in other parts of the nation are being confronted by gas prices soaring to $2 and higher, bringing back unpleasant memories of last year’s price increases.

Motorist Mark Lasser shook his head unhappily at the prices — $2.13 a gallon for unleaded and $2.25 for premium — as he stood filling his sport-utility vehicle at a San Francisco gas station.

"This is depressing," he said as the nozzle shut off at $41.83. "I already pay $250 to $300 a month."

Chicago taxi driver Ikemefun Onwuke said the latest price hikes may force him look for a different job. "It’s not worth it, driving a cab," he said.

U.S. gas prices reached an all-time high in the past two weeks, not adjusting for inflation, according to the Lundberg Survey of 8,000 service stations. Overall, the average price covering all grades of gasoline increased 8.58 cents to $1.76 a gallon as of May 4.

Factoring in inflation, that is a full dollar less than the average cost of gasoline in March 1981. It is also significantly less than motorists pay in much of the rest of the world.

That is small consolation to many, especially in the Midwest, which saw the highest price increase — 13 cents — and the West, where prices rose 8 percent since April 20. Those two regions fared worst in part because of the reformulated gasoline they rely on to limit pollution.

In Chicago, which has the nation’s highest average price at $2.02 for a gallon of self-service regular, a fill-up that used to cost Erika Trujillo $20 for her Nissan Stanza now runs about $30.

"This is crazy. $2.34 for a gallon of gas?" the 19-year-old cashier said at a pump in downtown Chicago. "We can’t even afford to pump gas anymore. We’re going to have to get on our bicycles."

Unlike last year, the crude oil supplies that are the source of U.S. gasoline are abundant. But the market remains jittery after fires at refineries in Los Angeles and Wood River, Ill., sent gasoline futures to a 17-year high last week on the New York Mercantile Exchange.