High gasoline prices in US, but limited impact

The national average is close to $3.05 a gallon – up almost 20 cents in the past two weeks.

from the May 9, 2007 edition

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In Washington, the rising cost of gasoline seems to have struck a chord. On May 6, Sen. Charles Schumer (D) of New York called for an investigation by the Government Accountability Office (GAO) on why refinery capacity hasn't kept up with demand. "Are US oil companies under investing in domestic refining capacity in order to purposely keep the market tight and exploit market disruptions for profit potential?" he asked in his press release.

On the House side, Rep. Bart Stupak (D) of Michigan, who sits on the House Energy and Commerce Committee, introduced with 93 cosponsors this February legislation to crack down on price gouging. The Senate has also introduced antigouging legislation.

Don't blame us, say the gasoline retailers. Mr. Turner, who is also the chairman of the National Association of Convenience Stores (NACS), says the wholesale price has risen so fast that he is now selling gas at 17 cents below his cost. "At some point, we have to catch up if we want to stay in business," he says.

In fact, NACS says that credit-card companies now make more money ($6.6 billion in fees) on gasoline sales than the convenience stores do ($4.8 billion).

In the past, as gas prices climbed, an increasing number of Americans "conveniently forgot" to pay. In 2005, this amounted to $300 million of gasoline. But since then, more stations are requiring people to pay in advance. In 2006, theft dropped to $122 million.

One of the reasons for the decrease in theft may be consumer education. In Indiana, where gas theft has steadily risen for the past three years, the Indiana State Police has tried to get people to use locking gas caps so fuel can't be siphoned, says First Sgt. Brian Olehy.

That message, repeated in other states, has resonated with Drew Eggers, a mint farmer in Meridian, Idaho. "When the price of gas goes up, you've got to watch your vehicles where they're parked and watch your gas and diesel barrels and keep them in well-lighted areas," he says.

Analysts are hoping that the worst of the price rises may be over. In the first quarter, imports of fuel were slow. But attracted by the high price, they are now flowing into the country. At the same time, refiners are cranking up production of the summer blend of gasoline.

"Historically, gasoline prices peak around Memorial Day and then fall off," says Brad Proctor of GasPriceWatch.com. "Based on the raw price of oil, prices should be dropping 15 cents to 18 cents a gallon."

• Alison Snyder contributed to this article.

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For further information:
•	Seventy Nine House Members Introduce Bill Website of Congressman Bart Stupak (D-Mich.)
•	Senator Feinstein Cosponsors Bipartisan Measure to Ban Price Gouging at the Gas Pump Website of Senator Dianne Feinstein (D-Calif.)
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