Gasoline prices soar to new highs by Robin Washington Tuesday, June 20, 2000

Skyrocketing gas prices hit another all-time high in the Bay State as fuel woes nationwide continued to drain oil resources and the patience of drivers.

A rise of three cents per gallon last week pushed pump prices to their highest level ever recorded in Massachusetts, with regular unleaded averaging $1.64 per gallon, according to the American Automobile Association of Southern New England.

``It seems every week we have a new highest price of all time,'' said AAA spokesman Art Kinsman. ``The lowest for regular was $1.57. The highest was $1.71. Unless you have a real strong loyalty to a particular retailer, why you would want to pay over the average is beyond me.''

At the Texaco on the corner of Huntington and South Huntington in Jamaica Plain, Tanya Gomes' loyalty was to the cheapest pump she could find.

``It's very expensive. I can't afford it. Every other day I'm putting $10 of gas in,'' said the Dorchester resident while fueling up on regular unleaded at $1.69.9.

While gas prices rose earlier in the spring due to low crude oil production by oil exporting countries, an April agreement by OPEC to increase output hasn't stemmed the rising prices. Although OPEC is again considering raising production, analysts say it would still be several weeks before it would affect pump prices, and trace the current increases to the doors of the oil companies.

``The problem is not the availability of crude. It's that we don't have enough refining capacity,'' said Tom Kloza of the Oil Price Information Service in New Jersey, painting a scenario of many aggressive buyers of refined gas but not enough sellers. That basic example of supply and demand works in favor of the oil companies, he said. ``The refiners and producers are making money. They've been enjoying the party, but the distributors and the dealers haven't been invited yet,'' he said.

Tibor Hangyal of Magazine Beach Shell in Cambridge would settle for a rent party.

``I'm just going to make my rent on gas. If we can't sell the candy bars and the soda and the repairs, gas would be $3 a gallon,'' he said, adding that he gets the same markup whether gas sells for 85 cents or $2 per gallon.

Yet the Bay State price crunch pales in comparison with Midwestern prices, where $2 would be a bargain at A & N Amoco on Chicago's Near North Side.

``For here today? It's $2.27. That's not too bad,'' said Melissa Lukas by phone with a laugh, adding that Chicagoans have gotten used to prices in excess of $2 per gallon over the past few weeks.

Pump-busting prices in the Midwest have been partially attributed to a federal directive mandating new, cleaner-burning reformulated fuels. But regulators say the new fuels could not possibly cost that much and have asked the Federal Trade Commission to investigate.

At a hearing of the Energy and Power subcommittee in Chicago, Rep. Jan Schakowsky (D., Ill.), has charged the oil industry with price-gouging.

Industry representatives disputed that.

``We are running at the knife's edge of supply in terms of refining and moving supply here,'' Dave Sykuta of the Illinois Petroleum Council responded. ``If anything goes wrong, we have a problem.''

Indeed, at the other end of the Mississippi something did. Last week, a dry dock collapsed into a Louisiana ship channel, blocking oil deliveries to two major refineries. The federal Department of Energy responded by authorizing shipment of 1 million barrels of crude from the nation's reserves for the first time since 1996.

``They were in danger of running out of oil so they asked us to exchange oil from the Strategic Petroleum Reserves with them,'' Energy spokesman Drew Malcomb said from Washington, adding that the companies will replenish the oil with interest.

But don't expect those reserves to be used to lower gas prices, he said. ``It has always been an option but it is not one under active consideration at the moment.''

At the Texaco on Huntington, John Chapman of Boston said the government could use the reserves responsibly and still help the current price crunch.

``There must be some percent that they could contribute to the general public to ease this thing for us,'' he said.

Filling up his rented Ryder truck nearby, Sean Holloway said reserves, meant for national defense, should be kept for a real rainy day. But he agreed the pump prices were painful. ``It's killing me, you know?'' he said.

Yet Holloway said there could be a good side to it if it keeps people from driving cars unnecessarily.

``Keep the prices high, keep the pollution down. That I can understand,'' he said.

Herald wire services contributed to this report.

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-- Martin Thompson (mthom1927@aol.com), June 20, 2000