No relief at the pump

Tony Miner, like everyone else who drives, is feeling the higher gasoline prices right in his wallet.

He burns through a fair amount of fuel on his commute from his Stanwood-area home to his Seattle job as a news anchor on KIRO (1000 AM) radio. His wife commutes to Bellingham.

"Just between my wife and me, it’s almost 200 road miles a day," he said.

On top of that, his two children, one commuting to community college and one to high school, add to the family’s fuel consumption.

"We’re starting to be conscious about where we buy our gas, because it can make a big difference," he said.

Miner and other motorists probably will not get a break at the fuel pumps anytime soon.

As of Friday, the average price for a gallon of regular unleaded fuel in the Seattle-Bellevue-Everett area was $1.82, according to AAA. That’s up 12 cents from a month ago, and less than 5 cents below the average at this time last year, when impending war in Iraq prompted prices to climb.

Statewide, the average price was $1.80, well above the national average of $1.72.

But it could be worse. In recent days, fuel prices have set records in California and Nevada. Nevada’s average price is above $2 a gallon, while California hit a new record average price of $2.18 on Friday. In San Francisco, the average price was $2.27 a gallon.

John Felmy, chief economist for the American Petroleum Institute, said the numerous factors propelling fuel prices can be boiled down to a simple equation.

"The classic case we’ve seen is reduced supply and increased demand," Felmy said.

The reduced supply can be attributed to production limits set by the Organization of Petroleum Exporting Countries, political instability in Venezuela and Nigeria — both large oil producers — and reduced production from Iraq, Felmy said. Crude oil prices reached nearly $37 a barrel this week, the highest in a year.

At the same time, demand for oil is up worldwide and in the United States, thanks to the recovering economy and this winter’s frigid weather on the East Coast, which boosted consumption of heating oil.

While that explains the rise in national prices, Felmy said Washington’s higher-than-average price for fuel can be blamed on demand in California, which steers the entire West Coast gasoline market.

The number of different blends that refineries have to produce for different areas of the country also means that gasoline supplies cannot flow easily from one market to another, he said.

"It’s simply unmanageable and a logistical nightmare," Felmy said, adding a pitch for federal action to establish one standard for all the regions. "Give the refiners the flexibility to produce a gasoline that meets the clean air mandates, and the system will improve."

Tim Hamilton, executive director of the Automotive United Trades Organization, which represents independent service stations in the state, agreed with Felmy that one national gasoline standard is a good idea.

But he said the oil industry, not environmental regulations or world market conditions, is primarily responsible for the recent hikes in gasoline prices. He accuses the industry of continuing to manipulate the supply.

"They are absolutely going to regulate the supply to maximize the price," Hamilton said.

He added that because U.S. oil and gasoline reserves are low, he is worried about what will happen to prices as demand peaks in the summer.

"We’re running on empty going into the spring. So if there’s any little type of problem this summer, the price could rise dramatically," he said.

By the time September comes around, Hamilton expects new records to have been set in this state for gasoline prices. He said they could top out anywhere from $2.25 to $3 a gallon.

With prices already in that range in parts of California, that state’s attorney general has scheduled a special meeting of a state task force on gas prices. U.S. Sen. Barbara Boxer also has asked for a federal probe of possible market manipulation by the big oil companies.

Felmy refuted charges that the companies are making excessive profits or manipulating markets. He also said analysts may be overestimating how far up prices will go.

"What I would say is I’ve heard those same prognostications from the same analysts before, and they haven’t happened yet," Felmy said.

But as the prices keep rising for the time being, Miner said he’ll keep shopping around to get the best price. He’s also happy that his family drives fuel-efficient cars.

"I cannot imagine doing the commute we do with a big SUV," he said.

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