Jun 11, 2000 - 06:17 PM

Gas Prices Jump Nearly 9 Cents in Three Weeks Thanks to Anti-Smog Regulations The Associated Press

CAMARILLO, Calif. (AP) - Gasoline prices climbed 8.82 cents a gallon in the past three weeks as a new kind of reformulated gas made its way to the pumps, giving some cities an average price of more than $2 a gallon. High crude oil prices, rising demand and new antismog regulations affecting 17 metropolitan areas pushed the nationwide average cost to $1.6723 a gallon Friday, analyst Trilby Lundberg said Sunday. That compares to the May 19 Lundberg Survey of 10,000 stations nationwide that found a national average of $1.5841.

"We are in a nightmare of patchwork-quilt environmental regulations which wreak havoc with gasoline supply and price stability," Lundberg said. "The wide variety of regulations affecting formulas has created wide price disparities around the country and made distribution of gasoline more problematic."

Metropolitan areas with some of the worst air pollution in the nation were required by June 1 to start using a new kind of gas that is designed to preserve air quality.

Dealers in the Midwest, where many cities use a kind of reformulated gas that is blended with the corn derivative ethanol, are paying 26 cents more at wholesale, Lundberg said. Consequently, some retailers have sacrificed profit margin to remain competitive.

In Chicago, one of the 17 metro areas affected by the new regulations, the average price for a gallon of self-serve regular was $2.1309, Lundberg said. That price marks the first time on record that a city's overall average price for gas has topped $2, she said.

By contrast, Phoenix came in with the lowest average price with a gallon of self-serve regular costing $1.3916.

Lundberg predicted gasoline prices might drop slightly in coming weeks, especially if the Organization of Petroleum the Exporting Countries decides to increase production this month. But the price will come nowhere last year's weighted average on June 11 of $1.1902.

Although the latest prices appear to be the highest on record, they are actually lower than gas prices were at their peak in March 1981, Lundberg said. The March 1981 national average price, adjusted for inflation, was $2.6661, she said.

The national average price of gasoline, including taxes, at self-serve pumps Friday was $1.6260 per gallon for regular, $1.7225 for mid-grade and $1.8072 for premium. At full-service pumps, the average was $1.9279 for regular, $2.0157 for mid-grade and $2.0922 for premium.

http://ap.tbo.com/ap/breaking/MGIAQ4T8D9C.html

-- Martin Thompson (mthom1927@aol.com), June 11, 2000

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Sunday June 11 9:27 PM ET

EPA Sets Monday Meeting With Refiners

WASHINGTON (Reuters) - The U.S. Energy Department and Environmental Protection Agency will meet on Monday with refiners supplying reformulated gasoline to Milwaukee and Chicago to discuss why gasoline prices have shot up in the region.

An EPA official said the meeting was scheduled for 11 a.m. EDT Monday, but it would be closed to the public and the press.

The two agencies sent a letter to the refiners last Thursday, requesting the meeting. The refiners responded quickly and Monday's meeting was scheduled even sooner than anticipated, the official said.

In a joint letter to BP Amoco, the government regulators last week said supplies of gasoline in the two cities were adequate to meet demand and asked refiners to explain their costs in producing reformulated gasoline (RFG).

Similar letters were sent to each refiner that supplies RFG to the two cities, including Exxon Mobil , Phillips Petroleum Tosco Corp., Marathon Ashland Petroleum, Citgo and privately held Koch Petroleum.

The average price for regular unleaded gasoline in the Midwest hit $1.65 a gallon this week, while reformulated gasoline hit $1.84, according to the Energy Information Administration. Prices rose above $2 a gallon in Chicago.

EIA, the Energy Department's statistical agency, reported on Friday that gasoline stocks in the Midwest, including blending components used to make cleaner burning reformulated gasoline (RFG), are 15 percent below the five-year average for the region and the lowest since 1981.

In a special report on the gasoline market, the Energy Information Administration said gasoline demand in the Midwest had been growing more strongly in 2000 than it had for the last few years and left fuel inventory levels low.

Still, the EIA said ``a critical (fuel) supply situation'' for the region was not likely in the near term.

-- Rachel Gibson (rgibson@hotmail.com), June 11, 2000.