Wednesday, April 05, 2000

Regular gas price keeps on climbing

AAA reports average local price for gallon of gas is at $1.57 By Max Knudson Deseret News business editor

Major world oil producers decided to increase their crude production last week in a move to cut the spiraling cost of petroleum products, but the effects have yet to be felt in Salt Lake City, where gasoline prices jumped 8 cents over the past three weeks to yet another record high. The average price of a gallon of self-serve regular unleaded was found Tuesday to be $1.57 in the city, AAA Utah reported in a special survey that covered only the Salt Lake metro area.

The automotive club, with more than 100,000 local members, has been doing special, localized surveys in recent months as the price of gasoline has routinely hit new highs with each succeeding poll of local service stations. Its regular monthly survey that includes prices in Provo, Ogden and the state overall won't be released until April 18.

Nationwide, gas prices peaked about two weeks ago and since then have gone down by about 2 cents per gallon to $1.50, said Rolayne Fairclough, AAA Utah spokeswoman. "Just how much longer this slight downward trend will continue is anyone's guess," she added. Especially in Salt Lake City where the "downward trend" has yet to be seen.

Since April 1999, when the average price of gas in the city was $1.26  even that went up from the 98 cents at the beginning of last year  local gas prices have risen 39 percent. In September they hit $1.40, then took an autumn breather, moving down to $1.32 in November. In January prices were at $1.29, but they have moved up every month this year: $1.36 in mid-February, $1.42 in late February, $1.49 in March and now $1.57.

Last month, the average price statewide was $1.51, with $1.50 in Ogden and $1.52 in Provo. Unless the oil production increases begin to be felt quickly, it's reasonable to assume that other state and local prices will be higher when the new AAA survey is released in two weeks. Last week, OPEC decided to increase production of crude oil to lower the prices of petroleum products and help stave off a world economic crisis. It worked. Crude prices were at $34 per barrel in early March but have fallen about $9 since the OPEC last last month. In New York, Tuesday, May gasoline futures fell 99 cents to $25.45 per barrel, below what analysts term "technical support" prices, meaning they could go lower still. Gasoline futures fell 423 points to 79.93 cents per gallon.

Also on Tuesday, U.S. Energy Secretary Bill Richardson said the Clinton administration expects OPEC to exceed its new quota by about 400,000 barrels a day. Along with increases by OPEC allies, this could mean an increase of 1.8 million barrels a day in world output and a further spur to lower gas prices.

Iran and Iraq, which are OPEC members but did not sign on to last month's agreement, also said they intend to increase their oil output, as did some non-OPEC producers such as Norway and Mexico. Bloomberg News said Tuesday that it estimates 10 OPEC members, including Iran, exceeded their previous quotas by 1.05 million barrels in February, thus violating OPEC's March, 1999, productions cuts that created the rising fuel prices.

Up until then, the OPEC nations had stuck religiously to the agreement, much to the surprise of industry watchers who had seen such commitments violated routinely in past years.

http://www.desnews.com/dn/view/0,1249,155015544,00.html?

-- Martin Thompson (mthom1927@aol.com), April 05, 2000