- The Washington Times - Monday, March 7, 2005

Gasoline prices held steady in the already-high Washington area in the past week, while the rest of the nation saw pump prices jump 7 cents per gallon.

Nationwide, pump prices reached $2 a gallon, according to the Energy Information Administration, while local prices yesterday rose to $1.95. Prices in the District fell 1 cent, according to AAA Mid-Atlantic.

Local prices have not jumped because the market is already overheated, said Jacob Bournazian, a retail gasoline researcher at the U.S. Department of Energy.

“Two weeks ago, D.C. was ranked Number 2 in a list of the 10 best-selling markets [for oil] in the nation,” said John Townsend, manager of public affairs for AAA Mid-Atlantic.

Consequently, oil companies and gas stations in the area already have greater profit margins than in other areas.

“Prices respond quickly to increases in the rise of crude oil if profit margins are thinner,” Mr. Bournazian said. “The need to respond to crude increases is not as great in D.C. as opposed to other areas with thinner margins.”

Nationwide, prices rose to the highest average since early November, but were 6 cents below the peak set in May. The jump coincided with a 25-cent-per-gallon increase in the price of gasoline futures last week and occurred as crude oil futures climbed briefly above $55 a barrel.

Prices vary within the local jurisdictions — $1.95 a gallon in the District, $1.83 in Virginia and $1.90 in Maryland — because pumps are run differently in each state.

“Virginia gas pumps are heavily slanted toward independents; in Maryland, it is a 50/50 split between independents and big oil companies; and in D.C., there are practically no independents,” Mr. Bournazian said.

Prices also differ because large oil companies tend to push up prices at their contracting service stations, while independents can purchase gasoline directly from the nearest fuel supplier in Newington, Mr. Bournazian said.

Prices are $2.24 a gallon in Rockville, $2.21 in Bethesda, $2.17 in the Palisades neighborhood in Northwest and $1.94 in Southwest, Mr. Townsend said.

“Gas prices can behave like quicksilver. … The prices at the pump can vary from block to block,” Mr. Townsend said.

Harry Murphy, director of technical services at the Washington, Maryland, Delaware Service Station Association, blamed the high prices on the major oil companies, which are posting record financial results.

“Profit margins were bigger in 1985 than today,” Mr. Murphy said. “For the oil companies, if you look at their last-quarter profits, they have been as high as they have ever been.”

The rising cost of crude oil is one of the major factors driving the price of gasoline higher — the result of strong demand, tight global supplies, geopolitical uncertainties and the falling value of the dollar.

The price of light crude for March delivery rose 11 cents to $53.89 a barrel yesterday on the New York Mercantile Exchange. Oil is about 45 percent more expensive than it was a year ago.

Sheik Ahmad Fahd al-Ahmad al-Sabah, president of the Organization of Petroleum Exporting Countries, said Sunday that the oil cartel’s producers are concerned by the recent rise in oil prices, “despite the fact that the market is well-supplied and global crude oil stocks have continued to build, now standing above their five-year average.”

Analysts expect oil prices to continue rising for two main reasons: Crude oil prices have been rising for the past week, and several refineries are converting to environmentally cleaner gas, which is required during the summer in polluted states and is more expensive.

“It takes two to four weeks for the jump to be translated to the pump,” Mr. Bournazian said.

Local gas stations are still using gas that was bought more than a month ago and was cheaper, Mr. Townsend said.

Another factor driving up prices is demand, as more cars hit the road, Mr. Bournazian said.

“You basically have the same average days of supply available,” he said.

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

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