Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, March 7, 1991 TAG: 9103070041
SECTION: BUSINESS PAGE: A-9 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
Shrinking gasoline supplies in most regions of the country and rising prices on the petroleum futures market will soon translate into higher prices at the pump, some in the industry predicted Wednesday.
"We should see about a 10-cent increase . . . before the end of the month," said Peter Beutel, an oil analyst with Pegasus Econometric Group Inc., in Hoboken, N.J.
It is impossible to predict price movements with perfection, but the stage seems to be set for higher gasoline costs.
In Western Virginia, suppliers have been raising prices gradually. It appears they will level off at the pre-Iraqi invasion figure plus the 5-cents per gallon federal tax increase that took effect Dec. 1, said Terry Phelps, president of Petroleum Marketers of Roanoke.
Wednesday's market price for crude oil closed at $19.73 per 42-gallon barrel, Phelps said. He predicted the price will level at $21 a barrel, the benchmark set on Aug. 1 by OPEC countries. That means street prices will rise about 3 cents to $1.03-$1.04 per gallon, he said.
If oil futures continue to rise, Phelps said, that may affect the prices charged by some of his 19 suppliers.
A survey for the American Automobile Association earlier this week found that the average pump price of a gallon of self-serve regular unleaded was $1.08, a drop of 2.6 cents from the previous week but 0.5 cent higher than on Aug. 1, the day before Iraq invaded Kuwait. But when new federal and state taxes are subtracted, prices were several cents cheaper than before the invasion.
The company that performs the survey for AAA, Computer Petroleum Corp., of St. Paul, Minn., said it expects retail gasoline to bottom out in the next few weeks.
The company's editor, Michael Doyle, said he has already seen wholesale prices rise 2 to 3 cents a gallon over the past few days, but he thinks local service stations will be slower to pass on increases for fear of losing business to competitors.
The nation's largest oil company, Exxon Corp., said Wednesday its wholesale gasoline prices had stayed the same for two days but were down slightly over the past week. Other major oil companies said it was hard to detect any trends in recent days, with prices generally staying about the same or dipping a bit.
Mobil Corp. said its wholesale price in the Northeast rose 1 cent a gallon on Tuesday.
But at the New York Mercantile Exchange, where energy futures contracts are traded, unleaded gasoline for next-month delivery has gone up more than 10 cents a gallon in a series of rallies over the past two weeks.
Retail gasoline prices often follow futures prices, although competition can work to keep prices down, said Dave Dickson, a spokesman for Texaco Inc., which has kept its prices stable recently.
"Because Nymex goes up one day doesn't mean our prices go up," he said. But after repeated rises in the futures market, Dickson said, "you will probably see corresponding increases" at the pump.
Analysts said it generally takes a couple of weeks for movements in the futures price to hit the streets.
One vocal critic of the oil industry, Edwin S. Rothschild of the Washington consumers group Citizen Action, said he thinks gasoline prices have bottomed out already.
"The wholesale market is up, inventories are at their lowest levels in six years and prices are about to go up as well," he said. "Consumers will no longer see the low prices they're currently seeing. I think we will see them climb 5 to 10 cents a gallon by May."
Business editor George Kegley contributed to this story.
by CNB