Soaring gasoline prices affect more than customers

Regular gas could top off at $1.80 per gallon by Memorial Day

SEAN GUTHRIDGE At this station in Holmdel village, a gallon of gas was just shy of $1.55 per gallon Monday.

By doug mckenzie

Staff Writer

With the prospect of another 20-cent rise in gas prices across the nation by the end of May, people throughout the area are beginning to feel the effects of the soaring prices.

Although oil companies are planning to boost production to help alleviate the rise in costs, a U.S. Energy Department study reveals that the rise in cost is probably inevitable.

If the price jump occurs, current prices of about $1.46 a gallon would balloon to about $1.80 a gallon during the peak summer driving periods, and even higher in some parts of the country.

Members of the Organization of Petroleum Exporting Countries (OPEC) are expected to meet on March 27 to decide whether to pump more oil after dropping production by 4.3 million barrels a day last year in response to a global oil glut that saw prices drop to below $11 for a 42-gallon barrel.

In the meantime, gas stations are being forced to raise their prices at a rate that has both the vendors and their customers complaining.

"People have asked me where I park my Lexus," an employee at the Mobil station on Route 36 in Leonardo said. "People don’t understand that the higher the prices go, the less we make. The owner of this place drives a 1987 Dodge."

According to Atlantic Highlands resident Craig Kopland, the owner of a Mobil station located on New Monmouth Road in Middletown, the increase in prices certainly affects his business.

"There’s no question, it hurts us," he said. "They make people become more price conscious when they see the same prices up and down the highways. But everyone has to realize that the same market forces that drive our prices up are the same ones that gave us gas for 85 cents a gallon last summer."

Belford resident Jim Lessard, an employee of the Citgo station in the Campbell’s Junction section of Middletown, said that most of the customers he has spoken with have displayed an understanding of why the prices are soaring.

"Most people seem to read the newspapers, so they know what’s going on," he said. "But they all say that they’re not going to travel as much."

Middletown resident Bill Baumann, who owns a landscaping business, echoed that prediction, saying that the gas prices have made him change his routine while servicing customers.

"I’m going to be paying up to $65 to fill the tanks in my trucks, and it’s simply not cost effective for me to continue operating my business the way I have been," he said. "I’m going to have to make a conscious effort to conserve gas with all of my equipment."

Lessard also said that customers now recognize quickly when a station’s prices are lower than its competitors.

"If we go much lower, the boss won’t be able to pay me," he said.

Tony Kanarsis, an employee of the Exxon station on Route 35 in Holmdel, said that customers tend to complain about the daily change in prices.

"We have some people complaining about how one day they’re going up, and the next day they’re back down, all depending on the orders we get from Exxon," he said.

Mohammed Qureshi, the manager of the Gulf station on Highway 35 in Hazlet, said that he is losing business because of the constant price changes.

"I’ve seen about a 60 percent reduction in gas sales," he said. "People who were normally getting $20 worth of gas are now asking for $5 worth. With every order that comes in I find myself having to raise my prices another 3 or 4 cents. Someone needs to investigate why this is happening because it’s never been like this, except for during the Gulf War."

Qureshi added that price increases are causing people to turn to privately-owned gas stations, which can charge less for nonadditive gasoline.

"That just creates more engine problems because fuel injection can’t handle many of those gases," he said. "If they can charge whatever they want, how are we going to survive. We’re hustling to stay competitive but we’re losing business."

Qureshi said that he believes a governmental standard needs to be established which would determine the minimum prices for all gas stations.

"People go to cheap prices and that’s how other people go out of business," he said.

Qureshi also said that it is essential that OPEC increases its production in order to offset some of the increases in prices, not only for gas for automobiles, but because of how the costs affect home heating oil prices.

"I feel very sorry for people who can’t work because of disabilities and have oil heat because the prices are ridiculous," he said.

Apparently, members of the state Senate agree because the full Senate recently approved a resolution sponsored by Senate Majority Leader John O. Bennett (R-12), which urges the United States Congress to investigate and publicly report on the shortage of oil and the rapid escalation of home heating oil prices since December 1999.

"People were hit with outrageous increases in their home heating bills, and we must ensure that we are not blind-sided again," Bennett said.

The cost of home heating oil has risen 84 percent over recent weeks, and Bennett wants to make sure the state ensures that it won’t happen again.

The resolution also requests that Congress review the current operational system for acquisition and distribution of home heating oil and its effects upon supply and prices.

Congress also plans to look at the impact of foreign cartels, such as OPEC, on the price increases of petroleum, and particularly home heating oil, since December 1999.

Congressman Rush Holt (D-12), meanwhile, is pressuring President Clinton to authorize the release of some of the oil from the Strategic Petroleum Reserve (SPR) and has co-sponsored legislation to require SPR to release oil if prices stay above $25 per barrel for two consecutive weeks.

After the mid-1970s oil embargo, Congress created the SPR to prevent another oil shock, according to Holt. The reserve currently holds 568 million barrels of oil and can be released with a nod from the president. However, the president has said he will wait to see what action OPEC takes at the end of the month before deciding whether to dip into the oil reserve.

According to Holt, one possible reason for the dramatic increase in petroleum’s prices can be traced back to an agreement signed by OPEC in March 1999 to cut back the flow of oil by 5 million barrels a day. The reduction raised the cost of one barrel of oil from $10 last year to nearly $32 today, he said. The agreement OPEC signed expires at the end of the month, at which time OPEC will decide whether to increase its flow of oil by 2million barrels a day.

"From raising children, to planning for retirement, to paying for prescriptions drugs, residents of central New Jersey have enough on their minds and should not need to worry about the price of gasoline and heating oil," Holt said Monday, adding he is "going to keep pressuring the president to move quickly on this issue, and I will keep fighting in Congress to pass legislation to help control oil prices."