War Threat Impacting Gas Prices

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War Threat Impacting Gas Prices

WHEELING, W.Va. -- Ongoing tensions with Iraq may be fueling speculation over the future of the country's oil supply and what that means for prices at the pump, but that's not the only thing that could impact what consumers pay for gasoline.

"The hurricanes in the Gulf have an impact on it, not just the threat of war," said Jan Vineyard, executive director of the West Virginia Oil Marketers and Grocers Association.

Industry experts also cite a dwindling oil supply. The Energy Information Administration (EIA) has been predicting an increase in oil prices during the last part of 2002 because world oil producers -- mostly OPEC members -- have slashed their production quotas, according to the Beckley W.Va. Register-Herald.

Because of this tightening of the world supply and the prospect of action against Iraq, the EIA is considering estimating even higher gasoline prices for winter in its forecast, which it will release next week. Regardless of the factors, though, it's still too soon to tell just what might happen at the gas pumps should the United States go to war with Iraq, Vineyard said.

"It's just hard to imagine what would happen if we went to war," Vineyard said. "But the weather does have an impact."

Vineyard said the location of refineries in areas where severe weather has hit or is expected could cause local gas prices to increase. The closest refinery that serves West Virginia is in Catlettsburg, Ky. But the oil produced there could go elsewhere to pick up the lack of supply from the weather-impacted refineries. "That could tighten our supply, and when supply is tight, prices tend to go up," she said.

According to the EIA, U.S. retail gas prices rose for the third time in the last month as the average cost of a gallon of gasoline soared 1.8 cents during the last week to $1.41. The price surge was led by the Midwest, where the average price for a gallon of gas rose 3.3 cents to $1.410. Motorists in the Lower Atlantic region had the cheapest pump prices even though the average cost jumped 3.1 cents to $1.345.

The West Coast had the most expensive regular unleaded gasoline in the country, but prices still managed to dip 0.8 cents to $1.51, the only drop posted in the major regions surveyed by the EIA. Among the six major cities highlighted by the EIA, Houston was the cheapest place for gasoline at $1.33, up 0.4 cents. In Denver, gasoline rose 0.2 cents to $1.39 while in New York City they rose 0.5 cents to $1.49.

The national price for cleaner-burning reformulated gasoline, which is sold at about one-third of the gas stations in cities and smoggier areas, rose 0.2 cents to $1.47.

U.S. truckers continued to pay more in the latest week as the price for a gallon of diesel rose 2.1 cents to $1.44, its seventh straight weekly increase. Prices, which rose across all major regions, are up an average 4.8 cents from a year ago. Truckers in the Lower Atlantic paid the least for diesel at $1.39, up 2.6 cents. The West Coast had the highest price with the average gallon of diesel up 0.2 cents to $1.54.