Drivers again feel gas price pains

Industry cites higher cost of crude; others see something more sinister.

By Stuart A. Hirsch

Indianapolis Star

August 5, 2000

A sudden spike in prices on the eve of the Brickyard 400 had Hoosiers grumbling at the gas islands again Friday.

Conspiracy theorists noted that several hundred thousand NASCAR fans converging on Indianapolis for the race would be a golden opportunity for oil companies to squeeze the motoring public for extra profits.

But there's no conspiracy, said Mike Pitts, a spokesman for the Indiana Petroleum Marketers and Convenience Store Association. It's just market forces at work.

"I did a spot check earlier this morning, and wholesale prices have gone up all around the state,'' he said.

Chuck Rice, spokesman for Ohio-based Marathon Ashland Petroleum, the parent company of Speedway and Starvin' Marvin stores, said a key reason for sharp price fluctuations is the supply and price of crude oil on the world market.

"This summer in particular, we've been at the mercy of the OPEC countries," Rice said.

In addition, he said, consumers are especially sensitive to price changes because they are "advertised on every corner 20 feet in the air in 2-foot-high letters."

The bottom line, he said, is that gasoline is subject to the same market forces as other commodities.

And if wholesale prices are up, retail prices at the pump are sure to follow.

It's the timing of the increase that caused suspicion among customers buying gas Friday at a Shell station in Avon.

Gary Thomas of Danville stopped to fill up at the station on his way home from work. Thomas said he wasn't concerned about the roller coaster-like price hikes and dips.

At least not until prices broke through $1.80 per gallon.

Asked why he thought the price had gone up so dramatically, Thomas said he just assumed it was because of the race.

"I'd say Tuesday or Wednesday you'll see it go back down, and then we'll know whether it's a game or not."

Even if prices don't drop after this weekend, he still thinks oil companies are gouging consumers.

"It doesn't take an Einstein to see that,'' he added.

Kirk Curran, the owner of Avon Shell, said he sympathizes with the price shocks customers have had to deal with this summer. "I feel bad for the consumer," he said.

But Curran added that he's a customer of the oil companies, too. To stay in business, he has to pass along price increases to customers.

But it has hurt.

"Last week we had three or four days where we made no money off gas." Overall, he said, his business is off 30 percent to 35 percent this summer.

"This is the toughest marketing situation I've seen in 22 years in this business,'' Curran said.

Gas prices began soaring in June, propelled by higher crude prices, pipeline breaks, changes in environmental regulations and low inventories at U.S. refineries.

Gov. Frank O'Bannon suspended the 5 percent state sales tax on gasoline, and accusations of price-fixing and gouging led Indiana Attorney General Karen Freeman-Wilson to launch an investigation.

On Friday, Freeman-Wilson issued a report on what investigators found after monitoring 458 gasoline retailers during July.

She concluded that Indiana retailers have complied with the sales tax suspension.

More importantly, she said, investigators found no evidence of either price-fixing or unconscionable pricing by retailers.

Still, in the past week, there has been an increase in complaints to the attorney general's gas price line from consumers irked by higher prices in Indianapolis, Terre Haute, Brazil, Rochester, Evansville and Mishawaka.

"The July data indicated that all Hoosiers were benefiting from significant gas price reductions," Freeman-Wilson said. "However, the geographical areas not reporting price spikes tell us our field work must continue at full force throughout the month of August."

http://www.starnews.com/news/articles/0805_GAS.html

-- Martin Thompson (mthom1927@aol.com), August 06, 2000