Copyright 2000 The Atlanta Constitution
The Atlanta
Journal and Constitution
June 13, 2000, Tuesday, Home Edition
SECTION: Business; Pg. 1F
LENGTH: 644 words
HEADLINE:
Increasing crude oil prices bound to take toll at pump
BYLINE: Russell Grantham, Staff
SOURCE: CONSTITUTION
BODY:
Rising crude oil prices may roll into higher gas
prices for Atlanta drivers this summer.
Local motorists paid 6
percent more for gas last month.
The average price of regular gasoline
in Atlanta is currently $ 1.42, up 45 cents from a year ago, AAA said.
Crude oil for July delivery rose $ 1.54 to $ 31.74 a barrel Monday, a
three- month high, on news that the Organization of the Petroleum Exporting
Countries won't increase its production for at least another week. But the
eye-opening sticker shock at the pumps hit drivers who paid more than $ 2 a
gallon in Chicago and Milwaukee, which are struggling to get enough of the right
recipe of reformulated gasoline to meet demand.
Gas prices shot up 23
percent in the past month in the Chicago area, AAA reports.
Such wildly
swinging fuel prices from one region and city to another may become a fact of
life in the future as Georgia and other states adopt " designer" gasoline blends
tailored to differing air regulations, said energy industry experts.
Add
to that OPEC's rediscovered muscle and unexpected supply problems such as
refinery and pipeline shutdowns, and you've got a volatile recipe for
unpredictable fuel prices, they said.
"We do expect an increase in price
volatility," said Tancred Lidderdale, a refining industry analyst with the U.S.
Energy Information Administration.
"With all these different types of
gasoline that are required," local shortages are more likely, he said. It's like
"finding the right person with the right spare part who can get it to you
quickly," he said.
Atlanta service stations have been required to sell
only smog-busting blends of gasoline during the summer, starting June 1.
The EPA requires service stations in Chicago and more than a dozen other
large cities with smog problems to sell so-called Phase II reformulated gasoline
from June 1 to Sept. 15 that evaporates slower and has lower levels of sulfur,
benzene and other compounds.
Vapors from gasoline and other organic
compounds are a major source of smog, according to the EPA.
The federal
clean air law didn't require reformulated gasoline in Atlanta, said Lidderdale
But the Georgia Environmental Protection Division set its own standards
that began requiring lower evaporation rates and sulfur levels than the federal
standards last summer for the 25 counties around Atlanta, said William Mullis, a
Georgia EPD official.
The fact that Atlanta requires its own recipe for
reformulated gasoline probably creates "some susceptibility" to supply problems,
he said.
Midwestern refineries have had more difficulty meeting the
EPA's June 1 deadline for producing reformulated gasoline, according to U.S.
Energy Information Administration analysts.
The Midwestern refineries
blend in more ethanol made from corn and other grains, which evaporates more
quickly than additives used for reformulated gas in other parts of the country,
they said.
Fuel prices also rose more sharply in the Midwest because of
outages at two pipelines serving Chicago and Detroit, they said.
Despite
such local gyrations, rising crude oil prices, and gasoline prices that have
risen almost 8 percent nationally since mid-April, the Energy Information Agency
still predicts falling gasoline prices later this summer.
"We're still
not changing our tune of the trend," said Neil Gamson, an EIA economist. The
agency's current prediction is for regular gasoline to retail for $ 1.55 a
gallon nationally in July and to decline to $ 1.51 on average by the end of the
summer.
But with the national average price already up to $ 1.59 a
gallon, according to the EIA, and crude oil prices still rising, a revision to
that forecast is likely, he conceded.
"What's in the pipeline right now
will result in higher prices if sustained, " he said.
The
Associated Press contributed to this article.
GRAPHIC:
Graphic
RISING GAS PRICES
While gasoline prices in the Southeast have
risen modestly since mid-April, some Midwestern cities are seeing prices over $
2 a gallon because of pipeline shutdowns and problems supplying a new
reformulated gasoline using ethanol. Here are the average gas prices for both
regions:
Midwest: $ 1.88*
Southeast: $ 1.53*
*Retail price per
gallon of reformulated gasoline, all grades
Source: U.S. Energy Information
Administration
/ TROY OXFORD / Staff
LOAD-DATE:
June 13, 2000 
