Saturday, August 30, 2003
Startled Drivers Fill It Up, Up, Up
By DAVID BARBOZA
OPEKA, Kan., Aug. 27 — Seated in the cab of his 18-wheeler, a Peterbilt 379, W. C. Rich — a
man who crisscrosses the country hauling furniture — pulls out a folder full of diesel fuel
receipts at a rest stop here.
"Look here," he says, adjusting his glasses. "Back on Aug. 12, I paid $1.359 in Hermiston, Ore.
This morning I paid $1.579. How am I going to make it with these prices?"
Mr. Rich, 61, owns and operates a trucking company and drives more than 100,000 miles a year.
He quickly calculates the additional cost of filling his 100-gallon tank: about an extra $22 every
time he fills up — or an extra $150 a week.
Dario Gamboa, a truck driver in California, is just as upset. So is Murtadha Alatishe, a taxi driver
in Houston. Indeed, across the country, truckers, taxi drivers, travelers and others buying
gasoline or diesel fuel ahead of the Labor Day weekend have been voicing similar concerns
because fuel prices are at their highest level, before adjusting for inflation, since the Energy
Department began tracking them in 1990.
Having risen in seven of the last eight weeks, the average retail price of gasoline this week shot
up to $1.75 a gallon, 24 percent above a year ago, according to the Energy Department. Not
since the mid-1980's has the price of gasoline been so high, though it is still well below the levels
of the early 1980's, when prices peaked at the equivalent of $2.90 a gallon.
Energy experts blame a host of factors, including a July 30 pipeline rupture in Arizona; refinery
problems on the East and West Coasts; and the power blackouts in the Northeast and Midwest
that caused several refineries to shut temporarily.
Big oil-exporting countries have also tightened supplies in recent weeks, some analysts say, even
as political turmoil has slowed exports from Nigeria, Venezuela and Iraq.
"You've had this confluence of events, the perfect situation to have an effect on global prices,"
said Chris Kelley, a spokesman at the American Petroleum Institute, which represents big oil
Record demand for gasoline in the United States is also helping drive up prices. Travel experts
say that many Americans who were unnerved by the Sept. 11, 2001, terrorist attacks and the war
in Iraq have decided to travel by car this summer, and to stay closer to home.
"This is the strongest gas usage on record," said Justin McNaull, a spokesman for AAA, which
estimates that 28 million people will travel by car this holiday weekend, the most in eight years.
"We saw a cloudy, gloomy, rainy first half of the summer. But the weather cleared up and people
realize this is the end of the summer."
Many, however, are venting their anger at pump prices. Just ask Cristin Cousins, a dentist in
Denver who, with her husband, was filling up her Ford Escape on Tuesday evening, preparing
for a 1,400-mile trip to Michigan for a Labor Day weekend wedding.
"I'm regretting our decision," Ms. Cousins said inside the gas station store. "Maybe we should
have flown because driving isn't going to save us as much money as we thought."
People who drive for a living are taking it even worse.
On Tuesday, at a truck stop in Buttonwillow, Calif., just off Interstate 5, Milen Dimitrov, an
independent trucker, was refilling his 100-gallon tanks, complaining about soaring prices and
easily calculable losses.
"Let me give you a simple example," he said. "If I have to pay 40 cents more per gallon, that will
be about $7,000 a year less for me."
A similar scene played out at another truck stop, this one in the San Joaquin Valley of California,
where Dario Gamboa, who was trucking fresh produce to Boston, paid $161.97 to fill his
refrigerated truck tank, about 30 percent more than he typically pays for diesel. "It's terrible," he
There are, of course, no uniform gas prices in the United States. On the East Coast, gas now
costs about $1.69 a gallon, up about 32 cents from a year ago, according to a federal survey. In
the Midwest, the price is close to $1.72.
But nowhere is gas more expensive than in beleaguered California, where amid a huge budget
deficit and a pending gubernatorial recall the average price of gasoline has jumped to $2.10 a
The most expensive part of the state is one of the richest, Santa Barbara, where prices are near
$2.21 a gallon. That is also the price in Laguna Beach, where Ken Carey, the owner of a Chevron
station, has been watching his customers wince at the escalating prices.
"In the last two weeks it's been up 38 cents a gallon," Mr. Carey said. "It's incredible. People
won't just run down to the grocery store to grab a quart of milk. They're going to wait till they
need a few items. They do cut back. They really do."
In Texas and the Gulf Coast region, where oil derricks are almost as common as churches, prices
are relatively reasonable, by comparison, averaging $1.60 a gallon.
But that doesn't mean people won't complain.
"I'm hoping for a break very soon," said Murtadha Alatishe, a cabdriver, as he filled up the tank
of a Ford Crown Victoria at a station in Houston, where gas was priced at $1.59 a gallon. "My
overhead is much higher and my take-home much lower."
Here in Kansas, where a severe drought this summer has wrecked most crops, higher fuel prices
are translating into higher costs for powering the combines that are just moving into action.
A lucky few farmers, though, have invested in ethanol, the corn-based fuel additive that is
pegged to gas prices. When gas prices soar, so does the price of ethanol.
"I hate to say it, but this is really good for us," said Ken McCauley, a farmer in eastern Kansas
who has invested in the Golden Triangle ethanol plant, across the state border, in Craig, Mo. The
plant produces 20 million gallons of ethanol a year.
Part of the problem can be seen in gasoline inventories, which are the lowest in three years,
according to Doug MacIntyre, a senior oil market analyst at the Energy Information
Administration, a division of the Energy Department.
The spike in gas prices is basic economics, and that means the highest weekly prices recorded
since the Energy Department survey began. "It's the highest price ever if you don't take into
account inflation," Mr. MacIntyre said.
But what consumers really want to know is when they can expect relief.
Some energy analysts say the signs are not promising. Refineries are overtaxed and near
capacity. And structural, regional and distribution problems persist in the industry.
Indeed, a study by the RAND Corporation, a research center in Santa Monica, Calif., found that
the nation's refiners expect price volatility to continue for the next few years, and that some
refiners even worry about their ability to handle the growing demand for gasoline. The Energy
Information Administration estimates that that demand will grow 1 to 2 percent a year.
"There's not a lot of excess capacity out there," said D. J. Peterson, author of the RAND study.
"This situation where you have temporary shutdowns in the Midwest, refinery glitches in
California — these things may continue to occur."