Thirty-one states have gasoline prices higher than Utah's. The highest average price is recorded in California at $2.77. The increases are as dramatic as those during the 1970s oil embargo. And we're not being embargoed.
Fairclough brings it down to a more personal level.
"Statewide average gas prices are up 53 cents since the start of the year," she said. "That means the cost of filling up an average sedan has gone up more than $8, more if you drive a minivan or SUV."
Eight bucks more for a fill-up. That hurts. It also impacts just about everything else people purchase -- the cost of food at the grocery store, the cost of appliances and home electronics, and even the price of the new car one may be planning to buy. All have to be shipped in via petroleum-powered transportation.
Gas prices are rising partly as a result of skyrocketing crude oil prices, which are trading at record levels this week. The price of crude oil has nearly tripled in the past three years. Energy traders seemed to be concerned about possible supply disruptions due to Iran's policy on the development of nuclear wea-pons and terrorist threats in Saudi Arabia.
"I just checked the price of a barrel of crude oil on the world market," Fairclough said. "It's now selling at almost $67."
Retail gas prices are also being propelled higher by reports of refinery problems in the United States. Collectively, these disruptions may be affecting as much as 3 percent of domestic gasoline production.
Refinery outages are especially troubling right now because the demand for gasoline is growing despite record high prices. Because average wholesale gasoline prices are also rising, it is possible retail prices will continue to increase over the next several days.
While increased world demand for oil, particularly in the Far East, is described as the major cause of higher oil and, therefore, gasoline prices, refining capacity in the U.S. is often referred to as another choke point.
Some market analysts report, even if oil producers could increase production (there is great debate on this question), the U.S. doesn't have any additional refining capacity. A new refinery hasn't been built here since the 1970s.
In fact, between 1980 and 1994, many older refineries were sold or closed by large energy companies.. The reason, according to Maverik Oil Environmental Manager Den-nis Riding, is that they were not as environmentally efficient to run.
"That's when many of the environmental regulations began to be implemented," said Rid-ing. "Even so, from 1994 on, refining capacity kept pace with demand, at least until now."
Based on that fact, he believes that, for the most part, it is the world cost of crude oil that continues to fuel higher gasoline prices.
"The cost of refining is only a small part of what the motorist pays for in each gallon of gasoline," Riding said.
Riding referred to a presentation, actually made in 2004, to members of the National Association of Conven-ience Stores (NACS) by Ronald E. Minsk. The gist of the presentation was that expanding existing refineries would be better than building new ones.
But Minsk didn't stop there. He contended that the United States "cannot produce our way to oil independence." Any increase in U.S. production would be met by equal cuts in OPEC production to keep the world supply, and price, at the same level. He described drilling in Alaska's National Wildlife Refuge as a "drain America first policy."
In conclusion, Minsk said that oil and, therefore, gasoline prices will remain volatile for sometime to come. In the long run, OPEC will retain market power.
"Is he right?" said Riding. "That's the $64 million question."
bmickelson@davisclipper.com
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