Gasoline prices inching up

More increases expected

SCOTT WYLAND THE OLYMPIAN

SOUTH SOUND -- While snow flurries have made late March feel like January, Gas prices are making their usual springtime jump.

Motorists who fill up at South Sound gas stations are paying an average of $1.25 per gallon for regular unleaded, 11 cents more than a month ago.

And prices are expected to climb higher as summer travel and the strengthening economy push up demand in the face of tighter gas supply.

Dean Jaswal, owner of Steamboat Fuel Stop in Olympia, said he's hearing customers complain about the price of gas.

"People are unhappy about it going up," Jaswal said.

In response to rising wholesale prices, Jaswal tacked on 7 cents to the price of regular unleaded, bumping it to $1.29 per gallon. On Monday, he will add 5 cents to the price, he said.

Six weeks ago, he sold regular at his station for $1.07 a gallon, he said.

And forecasts are grim, Jaswal said. Sales representatives from Shell and Texaco predict the price of regular could reach $1.60 by midsummer, he said.

Some of the price pressure comes from the industry's plans to curtail supply despite rising demand.

The Organization of the Petroleum Exporting Countries has cut production by about 5 million barrels a day, resulting in crude-oil prices climbing to $25 a barrel. OPEC plans to produce at the current level until at least June.

Oil refineries have also announced they will scale back because they have built up a gas surplus, said Janet Ray, spokeswoman for AAA Washington.

Such a move is bound to increase gas prices, Ray said.

What's more, an escalation in Mideast conflicts could further weaken supply and drive up crude-oil prices, Ray said.

These market forces could compound the normal rise in fuel prices seen during spring and summer, Ray said. "We need to anticipate that, given everything, prices will increase across the state. The question is, 'How much?' "

The head of a state trade group contends that petroleum companies are deliberately crimping supply to raise fuel prices during the peak travel time.

"This is not the effect of the marketplace," said Tim Hamilton, executive director of Automotive United Trades Organization in Olympia. "They turned the valve off."

Refineries are reducing output by 15 percent to raise gas prices, Hamilton said. In the past, oil companies have exported gas to tighten supply and inflate prices, he said.

So far, gas prices aren't so high that people are canceling travel plans, Ray said. She has observed that prices must creep above $1.60 a gallon before people question their gas-buying habits, she said.

Jerry Goddard, owner of Jerry's Automotive & Towing, said the price for regular unleaded at his Union 76 station is $1.19 per gallon -- so no patrons have grumbled yet.

But steeper gas prices have increased the costs to his towing business, Goddard said. If prices rise above $1.40 a gallon -- the level seen a year ago -- he will ask the state for permission to add a gas surcharge to his towing bills.

"We hope it doesn't go that high again," Goddard said.

Olympia

Average price of regular unleaded gas:

- Wednesday: $1.25 per gallon

- Month ago: $1.14 per gallon

- Year ago: $1.48 per gallon

Source: AAA

On the Web:

- AAA Washington

For more local news go to the Business section.

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