Fwd: [BATN] Bay Area gas at record high; experts cite ethanol

Joseph S Barrera III joe@barrera.org
Wed, 12 Mar 2003 20:20:53 -0800

I'm glad I decided to get the commuter Honda
for my stupid 90 mile/day round trip commute...

-------- Original Message --------
Subject: [BATN] Bay Area gas at record high; experts cite ethanol
Date: Thu, 13 Mar 2003 00:43:23 -0000
From: 3/12 Oakland Tribune <batn@yahoogroups.com>
Reply-To: BATN-owner@yahoogroups.com
To: BATN@yahoogroups.com

Published Wednesday, March 12, 2003, in the Oakland Tribune

Bay Area gas prices driven to record high
Experts say switch to ethanol to blame

By Alan Zibel
Business Wrtier

Nine out of 10 large Bay Area cities are experiencing the highest
gasoline prices on record, with the average price of regular unleaded
rising a whopping 28 cents during the past month to $2.14 a gallon
Tuesday, AAA of Northern California said.

"The gas price is ridiculous, man," said taxicab driver Sayed Hashimi
of Livermore, while waiting for customers outside the Dublin-
Pleasanton BART station Tuesday afternoon. Gasoline now costs Hashimi
$30 to $35 every day, he said, compared to $20 a day before the
recent increase in prices.

"Everybody is in bad shape these days," Hashimi said. "The gas prices
(are) making it worse."

In his cab, fellow driver Abdullah Akbari of Manteca said he is
barely making any money because of the high gas prices and predicted
that prices will rise even higher.

"Then we'll all go out of business," he said.

The 15 percent increase in average Bay Area gas prices during the
past month compares unfavorably to the nation as a whole. The
national average for regular unleaded increased only 5.5 percent, or
9 cents, to $1.70 a gallon on Tuesday, according to AAA statistics.

Highest prices in nation

Drivers filling up in San Francisco on Tuesday were paying the
highest average gasoline prices in the country, with prices at $2.24
a gallon, said AAA spokeswoman Jenny Mack. San Mateo was not far
behind, with prices at $2.21 a gallon.

The only place in the Bay Area that had not yet broken its all-time
price record as of Tuesday was Pleasanton, where the average price of
$2.03 was 2 cents shy of the previous record of $2.05. That record
was set in June 2001, Mack said.

Gas prices have been on the rise since early to mid-January. Analysts
attribute the nationwide increase to high crude oil prices, which
have risen on fears of a war with Iraq, and because of low production
in Venezuela due to a strike there.

Still, California's dramatic price increases have outpaced the
nation. Analysts say one reason is that the state's shift away from
the polluting additive MTBE (methyl tertiary butyl ether) to corn-
based ethanol has caused logistical difficulties for oil refiners.
Also, the state's specifications for its clean-burning gasoline are
different than the rest of the nation, reducing the state's ability
to import gasoline from elsewhere.

Because of its unique gasoline standards, California "doesn't have as
many supply options," said Peter Zipf, editor in chief of Platts
Oilgram News. "If supply is tight, there are far fewer places to
reach out and go and get more."

Jay McKeeman, executive vice president of the California Independent
Oil Marketers Association, said many oil refineries are down for
maintenance right now, as they make the switch from the winter gas
formula to summer blends.

A price increase normally occurs during this switchover, McKeeman
said, but this year's switch has been worsened by the transition from
MTBE to ethanol.

Some refiners are still using MTBE as an additive, though, and oil
companies cannot legally mix the two types of gasoline. However,
using both blends in a vehicle does not present a mechanical or
performance problem. The switch, McKeeman said, has "eliminated the
ability of companies to efficiently and quickly swap product to cover
shortfalls that they may have."

$3 per gallon gas seen

"I think this spike isn't over yet," McKeeman said. "I could see
three-dollar gasoline real easy during the summer if we start having
refinery problems."

The transition to ethanol has complicated the switch from winter-
grade to summer-grade gasoline and caused logistical problems as
refiners make "rather major changes in how they make their gasoline,"
said Rob Schlicting, spokesman for the California Energy Commission.

"You may see some outages, some shortages," Schlicting said.

Still, Schlicting said he was encouraged by one piece of data:
California's refiners produced 8.2 percent more gasoline last week
than the week before.

"That's good news," he said. "'A lot of this right now is a tight
market. The more supplies that we have, the better it's going to be."

Last week, U.S. Sen. Barbara Boxer called for a federal investigation
into California's gasoline prices, saying she was concerned about
possible manipulation of gasoline supplies due to shutdown

According to energy commission data, refiners' cost and profit
margin -- the difference between the cost of crude oil and the
wholesale price of gas -- has increased to 55 cents for name-brand
gasoline this week. That's up from a margin of 25 to 38 cents earlier
this year.

Still, Ron Planting, an analyst at the American Petroleum Institute,
denied allegations of price gouging, saying that there have been
numerous investigations into gasoline prices.

"In all cases, they have not found evidence of anticompetitive
behavior or price fixing or any of those things," he said.

Email article texts/URLs for posting to <BATN@yahoogroups.com>.

Manage your subscription by sending a blank email message to:
BATN-subscribe@yahoogroups.com to subscribe,
BATN-unsubscribe@yahoogroups.com to unsubscribe,
BATN-digest@yahoogroups.com to switch email to digest mode,
BATN-normal@yahoogroups.com to switch email to normal mode,
BATN-nomail@yahoogroups.com to switch email delivery off.
See http://groups.yahoo.com/group/BATN for web access & archives.

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/