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Published: Friday, 5/14/2004

Gasoline prices top $2 a gallon, set record for Toledo

BY DAVID PATCH
BLADE STAFF WRITER
At Heatherdowns Boulevard and Reynolds Road, a gallon of gas is more expensive than cigarettes or a gallon of diesel fuel. At Heatherdowns Boulevard and Reynolds Road, a gallon of gas is more expensive than cigarettes or a gallon of diesel fuel.
MORRISON / BLADE PHOTO Enlarge

Gasoline prices reached their highest ever in Toledo yesterday, soaring above $2 per gallon for unleaded regular at filling stations throughout the metropolitan area.

The jump from the high $1.80s and $1.90s to a prevailing price of $2.059 per gallon was met with nearly universal disgust from motorists filling their tanks, but industry analysts said prices are likely to continue climbing as the summer driving season enters its prime with the upcoming Memorial Day holiday.

"It's not that you're happy about it, but you just have to pay," said Gwen Milton, a preacher's wife who put just over 12 gallons in her auto for $25 at the Key Marathon in South Toledo yesterday afternoon.

Across the border in Michigan, motorists were hit even harder. Stations in Monroe were selling at $2.149 per gallon for regular unleaded. Mid-grade and premium gasolines generally cost 10 and 20 cents, respectively, more per gallon.

Speedway stations appeared to lead the way in the Toledo area jump, but other brands followed soon thereafter. Patrick Bush, of East Toledo, saw the $2.059 at a Speedway on Lemoyne Road shortly after noon and went just down the road to a nearby BP that, at the time, was 17 cents cheaper.

"I was on 'E,' but I was willing to take a chance," Mr. Bush said while pumping the relatively inexpensive fuel.

Rising gasoline prices have tracked with sharply climbing world prices for oil. U.S. light-crude prices hit a record high late yesterday, with June futures climbing to $41.08 a barrel on the New York Mercantile Exchange (NYMEX). That was a penny higher than the Oct. 11, 1990, record set during the run-up to the first Iraq War, and a 31-cent increase from Wednesday's close.

Yesterday's pump jump was the second local hike in three days. On Monday, unleaded regular rose to $1.999 at most area filling stations.

By early yesterday evening, the last concentration of sub-$1.90 holdouts was at truck stops along I-280 near the interstate's junction with the Ohio Turnpike.

Gasoline had reached $2 per gallon in Toledo only once before, and then not to the same across-the-board extent. In mid-June, 2000, prices at some local stations rose to $2.039 for unleaded regular while the region's supply was constricted by a pipeline failure in southern Michigan and refinery outages in Illinois.

But many stations held the line at $1.999, and that proved to be the summer's peak. By July 4, 2000, local prices fell into the mid-$1.50s.

A few stations in the region jacked prices well over $2 per gallon after the Sept. 11, 2001, terrorist attacks, but those prices lasted only a few hours, and most stations stayed far below that mark.

Fred Rozell, director of retail pricing at the Oil Price Information Service in Lakewood, N.J., said this time, the price likely will keep rising. He predicted that those states that don't already have $2-per-gallon gas probably will get there next week.

"Demand is up 3 percent, and we haven't even hit the peak driving season yet," he said. "In the short term, the rise should continue. It's tough to predict the mid-term, but I expect the highest prices of the year to come in August, when summer driving will have been on for quite a while and supplies will begin to tighten."

Gasoline already had passed the $2 mark on both coasts and in Chicago, among other places. Dan Beck, a Kraft Foods representative from Chicago who was in Toledo yesterday to visit the Kraft Nabisco flour mill on Front Street, was relatively unfazed by the price hike here.

"It's about the same [as at home], actually," he said.

The "hot spot" in the United States, Mr. Rozell said, is Santa Barbara, Calif., where regular is averaging $2.40 per gallon.

According to AAA's Daily Fuel Gauge Report, the average price for regular in Ohio yesterday morning was $1.953 per gallon, just 0.3 cents above the national average, while Michigan's average was $2.011 per gallon. Both Ohio and Michigan averages had risen about a nickel in just a day.

Low inventories, surging world demand, and Middle East instability all are considered contributing factors in soaring world oil prices.

"There is a war or fear premium built into the price of crude oil," said Ed Silliere, vice president of risk management at New York-based Energy Merchant Corp. "It seems that al-Qaeda is ready, willing, and able to attack Saudi Arabia's oil facilities, and that fear is bringing speculators pouring into the NYMEX."

Mr. Silliere said recent events in Iraq - which clearly had taken a turn for the worse - had compounded terrorism fears. Loss of oil production in Iraq, coupled with lower production in Nigeria and Venezuela, have worsened the situation, he said.

Another factor that boosts U.S. fuel prices in late spring is air-quality regulations that require chemical additives, including the controversial methyl tertiary butyl ether (MTBE), in gasoline during the warm-weather months to reduce pollution. The required formulas differ among various metropolitan areas, which requires refiners to produce "boutique" fuel in smaller quantities that increase production cost and make local supplies more vulnerable to refinery or pipeline problems.

While adjusting for inflation reveals that current prices are only half those during an oil-price shock that followed the Iranian revolution in 1979, they also are in stark contrast to gasoline that cost as little as 76 cents per gallon in early 1999, when an economic crisis in Asia dampened that region's demand and crude fell below $12 per barrel.

"It's horrendous. I can remember when it was just two digits," said Patti Seckers of Cleveland as her husband filled up their Grand Caravan minivan at the Lemoyne Road Speedway yesterday. "It's making traveling harder. But I don't know what we can do about it."

Lori Ghesquiere, a spokesman for AAA Northwest Ohio, said it is too soon for any true trend to be apparent, but she took a call recently from an auto club member who wanted to know if a planned Las Vegas vacation now would be cheaper to fly instead of drive. "For the longest time, everyone was choosing to drive," she said, "but now things are changing."

But the suggestion that driving less might be one solution to the price spike made Ms. Seckers, who was returning home after visiting grandchildren in Michigan and who has relatives across the country, bristle.

"We're Americans. Americans drive. That's what we do," she said.

Blade staff writer Erica Blake and Blade wire services contributed to this report.

Contact David Patch at:

dpatch@theblade.com

or 419-724-6094.



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