Monday, August 25, 2003

Motorists can expect to pay record-high prices at the pump this weekend as they fuel up for the Labor Day weekend.

Regular-grade gasoline surged 12 cents nationwide, or 7.4 percent, in the past week to a record $1.747 a gallon, the U.S. Energy Information Administration said yesterday.

Refineries shut down for one or two days by the Northeast power outage, rising crude oil prices, a broken gas pipeline in Arizona and increased demand expected for Labor Day combined to ratchet up the price of gasoline.

“It’s expensive, really expensive,” said Andrew Queral, a 24-year-old auto mechanic who stopped to fill up his car at Scott’s Amoco station in College Park. “I buy premium gas, too.”

Premium gas sold for $1.84 cents per gallon at the College Park station yesterday, up about 9 cents from two weeks ago.

In the Washington area, unleaded regular gasoline averaged $1.63 per gallon yesterday. A year ago, it cost $1.43 per gallon, according to AAA Mid-Atlantic.

“This is quite unusual to see prices rocket up the way they have,” said AAA Mid-Atlantic spokeswoman Deborah DeYoung. “It’s just been a weird year all around.”

The nationwide price is the highest since March 17, just before the start of the U.S.-led war on Iraq, when rates hit a record high of $1.728 a gallon.

The Labor Day weekend — the unofficial end of summer — will put more demands on the nation’s gasoline supply. About 33.4 million Americans are expected to travel away from home during the weekend, about 1.8 percent more than last year, according to AAA. About 84 percent will drive.

Gasoline prices could drop as much as 25 cents per gallon after Labor Day if Persian Gulf political tensions ease, Miss DeYoung said.

Service station managers are complaining as much as customers about high gas prices.

“It’s killing us,” said Jim Thompson, general manager of the Scott’s Amoco, who said customers are buying less gasoline from him. “Our sales are way off.”

Service stations make only a cent or two per gallon on gasoline sales. Their prices — and profit margins — are determined by contracts with oil companies.

Some motorists blamed the companies for the rising gas prices.

“We’re at their mercy,” said Henry Jones, a D.C. government social worker, as he stood in line to pay his gas bill at the Amoco station at Bladensburg Road and 25th Place in the District. “It seems like it fluctuates hourly.”

Oil companies reported the highest earnings in the second quarter of this year since their record profits two years ago.

Exxon Mobil Corp., the world’s largest publicly traded oil company, posted second-quarter profits that rose 58 percent to $4.17 billion (62 cents per share) from $2.64 billion (39 cents) a year earlier. Revenue rose 12 percent to $57.16 billion from $50.8 billion.

Profit from the production unit rose 27 percent to $2.84 billion, and rising fuel sales led to a 50 percent jump in refining profit.

Chevron Texaco, the second-biggest oil company, reported even better results.

Second-quarter profit quadrupled to $1.6 billion ($1.50) from $407 million (39 cents) a year earlier. Revenue rose to $29.36 billion from $25.33 billion.

Outside the Amoco station on Bladensburg Road, sitting in the driver’s seat of a delivery truck, Steve Langer complained about the surprise he received when he traded in his Ford pickup with a V-6 engine for a new one with a larger V-8 engine.

“The other day I went to fill it up,” said Mr. Langer, a sales supervisor for Utz Quality Foods Inc. “I said, oh, this hurts.”

Like most drivers, he could think of few alternatives.

“What are you going to do?” he asked as muggy afternoon temperatures heated up the cab of his truck. “You have to pay it one way or another.”

Other reasons for the high prices include continued political turmoil in Iraq and refinery shutdowns in the Gulf of Mexico caused by Hurricane Claudette early this month.

The power blackout in the Northeast Aug. 14 shut down seven refineries in the United States and Canada. Although they stopped production for only a day or two, the halt further reduced a tight gasoline supply nationwide.

“We have had supply problems in the Midwest due to the power outage, on the West Coast due to the Arizona pipeline problem and refinery outages in California, and in the Northeast and Central Atlantic,” said Doug MacIntyre, an economist with the Energy Department. “When demand exceeds supply and there are no excess inventories available, price spikes will happen.”

In addition, some gasoline that might have gone to the Washington area was diverted to Arizona, where a main gas pipeline burst last month.

“A lot of shippers started sending their gas to those areas where they could earn more money,” Miss DeYoung said.

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

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