Pittsburgh region drivers' tempers rising with pump prices

| Friday, Feb. 25, 2011

Facing a sudden jump in gasoline prices, many drivers filling up yesterday said they are mad as heck but are going to have to take it some more.

"I'm tired of these price increases," said Kevin Archey, 52, of Mars as he filled a Buick LeSabre at a BP station in Ross. "It's out of our control."

At an average $3.24 a gallon yesterday, the price of regular gasoline in the Pittsburgh region is its highest in about two years. The average price was $3.21 on March 11, 2008, according to auto club AAA East Central.

"Customers are not very understanding about these prices," said Hugh Campbell of North Huntingdon, who owns three gasoline stations. "But we are contractually bound to our suppliers, and they are raising the prices."

Local pump prices jumped an average of 4 cents a gallon overnight from Wednesday, said AAA Central spokeswoman Bevi Powell. Prices increased nearly 10 cents from a week-ago average $3.15 — to $3.25 to $3.35 at some stations.

"There's more room for prices to advance. I think prices will peak out nationally at about $3.60 or $3.70 a gallon sometime in early May," said Fred Rozelle, retail pricing director for Oil Price Information Service in Wall, N.J., which supplies data to AAA clubs.

The all-time high average price for unleaded gasoline in the Pittsburgh area was $4.05 a gallon, set on June 18, 2008, according to AAA East Central.

"I have to buy gasoline for my car. I don't have any choice," said Dana Greenblatt, as she pumped $52.31 worth of fuel to fill up a Kia Sorento. She has to trek twice a week from her home in McCandless to Hidden Valley Resort in Somerset County, where she teaches snowboarding.

"It's the unrest in the Middle East. It's affecting everything," said Greenblatt, 33.

The United States derives about two-thirds of its oil from abroad, and half of that comes from the Middle East, Rozelle said. The world uses about 87 million barrels of oil each day, 20 million of it in this country, which produces only about 5 million barrels of oil a day.

"If we drilled more oil here, you'd see these prices come down awfully fast," said David Kolesar, 42 of Hampton as he filled up in Ross.

Oil industry experts said popular uprisings, especially in Libya, Egypt and Bahrain, sent gasoline prices up because of the rise in the price of crude oil, the feedstock for making gasoline.

Crude oil that sold for about $85 a barrel early last week escalated to $100 on Wednesday before settling at $96 yesterday, Rozelle said. Those prices are set by traders of crude oil futures contracts on Wall Street, which move in tandem with futures contracts for wholesale gasoline prices.

"Usually, (retail) gasoline prices change within two days of crude oil prices changing," said Rozelle. Upheaval in the Middle East has caused a "fear premium" in fuel prices, he said.

"Once you get a dose of that kind of instability in a market that trades in futures contracts, it just accelerates the rise in crude prices," said Kent Moors, director of Duquesne University's Energy Policy Research Group.

Libya produces about 3 percent of the world's crude oil, or about 1 million barrels a day, with 80 percent of it going to Europe, said Moors. Saudi Arabia could produce more if Libyan supplies were disrupted.

"There's clearly enough supply out there. But the amount of crude moving to market is more expensive to extract and process," said Moors, also an oil and gas consultant to major oil companies.

Don Bowers, manager of petroleum products and transportation at Superior Petroleum Co. in Ross, said his buying prices have jumped by 40 cents a gallon in the past two weeks or so.

"We dislike these prices just as much, if not more, than the general customer because it costs us more money to do business," said Bowers, whose company owns 37 gasoline outlets in the region and supplies another 67 in three states.

A tanker truck-load of gasoline delivered to one of Bowers' stations cost about $20,000 three months ago but costs about $30,000 today, he said.

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