- The Washington Times - Tuesday, June 13, 2000

Gasoline prices hit a record high across the nation as Clinton administration officials met yesterday with oil refiners about soaring Midwest prices that they said "seem to be out of whack."

Officials from the Environmental Protection Agency, Energy Department and oil refineries discussed why gasoline prices have jumped to more than $2 a gallon in Chicago and Milwaukee, where gas stations are required to use more expensive, cleaner-burning fuel to ease pollution.

"The prices being charged are unfair and inappropriate," said Bob Perciasepe, assistant EPA administrator for air. "We see no good explanation for why these price differentials exist in the Midwest, specifically Chicago and Milwaukee."

The Midwest is not the only area being pinched by higher gasoline prices.

The average retail price for unleaded gasoline nationwide hit another high for the third week in a row, according to the Energy Information Administration's weekly survey of 800 service stations. The $1.63-per-gallon-price is a jump of 6.8 cents from last week.

At the meeting yesterday, eight large U.S. oil refineries which convert crude oil into gasoline blamed the rising prices partly on the cleaner-burning reformulated gas, EPA and Energy officials said after the meeting. The meeting was closed to the public.

The EPA mandated that, beginning June 1, metropolitan areas with severely polluted air must use the blended reformulated gas that's roughly one-third of the nation's pumps.

The cleaner gas is optional in parts of the District of Columbia, Virginia and Maryland.

The required formula is costing Midwest motorists as much as 23 cents a gallon more than conventional gas, compared with 9 cents on the East Coast, 5 cents on the West Coast and 2.5 cents on the Gulf Coast.

EPA statistics show that it costs only 5 to 8 cents more to produce the cleaner gas, Mr. Perciasepe said.

According to the Energy Department, the average price of all grades of gasoline in areas requiring reformulated gasoline nationwide was $1.67 a gallon June 5, about a dime a gallon more than standard gas sold in other parts of the country.

The average price in the Midwest for the cleaner gasoline was $1.83 cents a gallon, compared with $1.56 on the East Coast, $1.61 on the West Coast and $1.48 on the Gulf Coast, according to the department's statistical agency.

Prices in parts of the Midwest have jumped by as much as 30 to 50 cents a gallon. In some areas, gasoline prices have skyrocketed to more than $2 a gallon in a matter of a few weeks.

Mr. Perciasepe hinted that the oil refineries may be gouging customers.

"When there's an adequate supply, we have to assume something else is going on," he said.

At the White House, spokesman Joe Lockhart said that the Midwest price increases "seem to be out of whack," and that any evidence of price gouging that investigators find will be turned over to the Federal Trade Commission for further investigation.

It is unlikely the price for a gallon of gas will soar above $2 in the Washington area, said Lon Anderson, AAA Mid-Atlantic spokesman.

As of yesterday, the price for unleaded self-serve in Washington was just above $1.59. The cost has increased about 10 cents over the last month, which included the start of the summer driving season. Gas prices tend to rise in the summer because more people drive for longer distances.

Energy and EPA officials will continue monitoring the situation in the Midwest and will continue discussions with the oil refiners to bring costs down.

EPA officials said they might relax the reformulated-gasoline requirements for the summer, even though they do not believe it is responsible for high prices.

The agency gave St. Louis more time to begin selling the new gas but recently rejected similar requests from Chicago and Milwaukee.

The Midwest's gasoline inventories are the lowest since 1981, due mostly to strong growth in demand, according to government data.

But even with lower than usual inventories, supplies are still adequate to meet demand, the EPA said.

• This article is based in part on wire service reports.

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