- The Washington Times - Thursday, February 17, 2000

Gas prices rose 9 cents per gallon over a month ago and 40 cents over the same time last year, shattering records and sending Washington-area commuters in search of cheaper ways to get around.

Local residents say they are taking public transportation or driving smaller family cars to make up for high prices paid at the pumps. Rising fuel prices also have added to inflationary pressures and will likely reduce consumer spending, a key driver of the nation's booming economy.

"It's crazy, and I heard prices are going up even more," said Arthur Miller, a maintenance manager who drives each day from his home in Landover, Md., to his job at the Columbia Hospital for Women in the Georgetown neighborhood of Washington.

"I'm going to stop driving, and take Metro to work, because this is just crazy," said Mr. Miller, who fills up the tank of his Ford truck for $25 three times every two weeks.

A Metro official could not say whether ridership has changed in the last month, but courier, delivery and trucking companies are feeling the pinch.

Yellow Cab President Vaughn Williams said drivers of the 650 taxis in the area are talking about adding a $1 surcharge per trip until prices come down.

"In the past, with similar situations, we have added a surcharge on fares," Mr. Williams said. "They are talking about it now, since there is a lot of complaining about the gas prices."

A surcharge has to be approved by the D.C. Taxicab Commission's Panel of Rates and Rules. A surcharge was last implemented during the Persian Gulf war, when a 50-cent charge per trip lasted four months.

The sharp increase in gas prices is likely to have an effect on consumer spending and slow the economy.

"It's taking money out of retail sales," said Stephen Fuller, professor of public policy at George Mason University. "If this keeps up, it will begin to undercut consumer spending. If you're spending $5 more on gas, it's got to come from somewhere."

However, the energy component of the Consumer Price Index, the government's main inflation gauge, is not likely to have an inflationary impact like it did 20 years ago, said Edward Yardeni, chief economist at Deutsche Bank Securities in New York.

The average price for a gallon of unleaded gasoline in the Washington area is $1.40, and the American Automobile Association said prices could rise another 10 cents per gallon in the next month.

Even if prices remain at this level, the 3 million licensed drivers in the Washington area will spend an additional $744 million on gas in the next year, said Lon Anderson, spokesman for the AAA Mid-Atlantic. That's an average of $248 more per driver.

"That has a real economic impact to our region and real pocketbook impact on the consumer," Mr. Anderson said.

Gas and heating oil prices have steadily increased since last year when officials from the Organization of Petroleum Exporting Countries (OPEC) met and agreed to reduce production in an failed effort to stabilize the market.

In the 1970s and 1980s, the sharp increase in gas prices was quickly passed on to consumers. But economists say the country, especially Washington, does not rely nearly as much on energy as it used to.

The global boom the economy is experiencing now is based on technology, which is much less of an energy user than industries like automotive manufacturing, Mr. Yardeni said.

"It's not going to push us into a recession, even if it stays steady at $30 a barrel" its highest price since 1991, he said. "The realities are we'll adjust to it and live with it without significant problems."

Nationwide, gas prices have gone up 8 cents in the last month, a cent lower than the Northeast area, where severe winter weather this year has caused increased usage of heating oil.

The increased heating oil price prompted President Clinton yesterday to release another $125 million in emergency funds to states to help consumers pay for their soaring heating bills. That's in addition to the $175 million the administration previously released.

The funds will be targeted to Northeastern states that have been hit hardest. In Connecticut, the retail price for a gallon of heating oil increased from $1.08 to $2 between Jan 3 and Feb. 7.

Locally, Petro-Shreve was charging $1.649 per gallon of heating oil yesterday, down from $1.799 a week ago.

Energy Secretary Bill Richardson said yesterday he will be visiting OPEC members, including Saudi Arabia, Mexico and Norway, trying to convince them to boost oil production.

Roger Smallwood, who was pumping gas into his Kawasaki motorcycle at an Exxon station in Northeast, said he is upset because high gas prices are preventing him from driving his newly purchased truck: a Ford Ranger 2000.

"It's just too expensive," said Mr. Smallwood, who drives daily to work in the District from his home in Waldorf, Md.

Courier services are hurting too, said Eric Andrews, office manager at AA Courier Service in Silver Spring.

"We are not raising prices for customers, but the [high] gas prices are a burden for our type of business," he said.

Trucking companies in New England are delaying shipments of everything from heating oil to groceries because of soaring diesel prices.

Trucking companies operate on a 2 percent to 4 percent profit margin, so additional fuel costs are taken out of operating funds, said Mike Russell, spokesman for Alexandria, Va.-based American Trucking Associations.

"We have anecdotal evidence of a lot of small companies that are on the verge of parking their vehicles," he said. "And on the independent sector, some of them are already participating in demonstrations against the high price of diesel fuel."

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