Tuesday, February 08, 2005
Copyright © Las Vegas Review-Journal

Gasoline prices creep forward

AAA Nevada official says climb may continue during switch to summer blend

Charles Torres pumps gasoline Monday at the Oasis Car Wash at East Flamingo and Pecos roads. Unleaded gasoline prices averaged $2 a gallon in Las Vegas on Monday, AAA reported. Photo by John Gurzinski.

Local gasoline retailers are beginning to feel the impact of higher prices, which experts predict will remain high through March.

On Monday, regular unleaded gasoline in Nevada was selling for an average $1.91 per gallon, up 15 cents from $1.76 per gallon a month ago, according to AAA's daily fuel gauge report.

In Las Vegas, unleaded gasoline averaged $2 a gallon on Monday, up 14 cents from a month ago.

"Business has decreased 30 percent from a year ago," said Dave Larson, owner of Boulder Basic Exxon in Henderson. "Our overall profit is down 30 percent because of these prices."

Nevada's price tied the national average for unleaded gasoline, which was down a penny from the previous week, but more than 27 cents higher than the year-ago average.

Gasoline prices nationally rose more than 7 percent in January, leading most experts to predict further increases.

Analysts say average gasoline prices could surpass $2.15 nationally and even run as high as $2.50 this year, but they expect those highs to be short-lived.

AAA Nevada spokesman Michael Geeser expects prices to increase through March as refineries switch to the summer blend.

Crude oil prices fell below $46 a barrel Monday, their lowest level in a month.

Still, Dick Burdette, Gov. Kenny Guinn's energy adviser, said crude oil prices have been around $50 a barrel for a month. There is a lag between crude oil price increases and gasoline price increases, so Burdette is waiting for consumers to feel the full impact.

Burdette said refineries are about to begin the annual switch from a winter blend to a summer blend. He estimates there will be a short-term price spike while refineries go through the regularly scheduled maintenance change.

"There are questions about the ability to deliver and what (the Organization of Petroleum Exporting Countries) might do," he said. "And now we have the refineries switching to the spring blend, which tends to be more problematic."

The Oasis Hand Car Wash on East Flamingo Road is bracing for an onslaught of complaints if prices reach $2.30, although the owner expects people are getting used to higher prices and are complaining less.

"People are indifferent; they're used to it," said Darin Smith, the son of the retailer's owner. "We've seen a decrease in fixed-purchase buyers. Those people who come in and spend $20, now they get less gas. So now they get gas three times a week rather than twice a week."

Additionally, he said, his business is suffering now because most people are not loyal to one gasoline station but are going to different stations.

Geeser said the recent price increases should be attributed to the cold fronts that hit the East Coast in January, which raised demand for crude oil to heat homes.

"There was huge demand on home heating oil, which comes from crude oil," Geeser said. "There was already uncertainty in the market because of OPEC's meeting and the Iraqi elections. But OPEC agreed not to cut production and the elections went well. Prices should go up through March; once the turn around is complete prices should settle, although maybe not lower than $2."

The Associated Press contributed to this report.