Gasoline prices going up

South Whidbey motorists are watching gas prices rise at the fastest rate in 14 months. Political events, an unstable economy and increased demand at the pump has raised prices 21 cents during the past month.

Regular self-serve gasoline on South Whidbey is currently selling gas at prices between $1.49 to $1.54 a gallon. Mike Davis, the owner of several Exxon stations, including the one at Bayview, said the increase in prices has been dramatic over the last several months. His figures show a 15 to 20 percent hike.

What South Whidbey motorists pay at the pump has a lot to do with what's happening in the world and supply and demand. Iraq's recent 30-day ban on oil exports and an attempted coup in Venezuela have affected supply here. According to the U.S. Department of Energy, refineries showed a drop in the crude supply of more than five million barrels, as they prepare to process more into gasoline for the summer driving season.

Prices have fluctuated since the events of Sept. 11, going as high as $1.81 for regular and $2.01 for premium to as low as $1.01 for regular in December. Now, in anticipation of summer travel, demand is up and production is down.

Marty Winn, owner of McQueen's Marine and Auto in Freeland said he sees more increases.

"I think prices will go up this summer, but I hope not as much as last summer," he said.

Winn said it's tough to keep prices down in this area because of zone pricing. He said the distributor charge for South Whidbey is one of the most expensive in the state. That fact, he said, frustrates him.

"There is no reason we should be paying more wholesale here than anyone else," he said.

Knowing he is at a disadvantage to other gas retailers on the mainland and Oak Harbor -- who pay lower prices for their gasoline -- Winn said he cannot rely on gas purchases to keep his business afloat, especially at times like these. He has to keep his margins thin to stay competitive. When gas prices hit $1.81, Winn was paying $1.76 to buy it. A good margin for his business should be 12 to 13 cents per gallon.

"I can't depend on just gas," he said.

Davis said he tries to spread the zone pricing among the several stations he owns.

"I average the cost of the high priced zones with the lower ones so I can share some savings."

But the real controls on the price of his gasoline lie in the crude oil market. Crude is selling for $26.50 a barrel and the price has been going up since February.

At the pump customer reaction to price is mixed. Candido Freitas of Clinton thinks prices are too high.

"We pay a little more here. I am certainly driving less, and we are trying to combine our trips," he said. "We need more oil available to us, less dependence on OPEC. Well-drilling in the National Wildlife Reserve seems OK to me."

As usual, gas is most expensive on South Whidbey, compared with Oak Harbor to the north and the mainland to the east. The price for a gallon of gas in that city is about $1.37 a gallon.

People who drive their own vehicles for work are very aware of the price of gas. Jodi Fuentes, a nursing caretaker for Island Home Nursing, said she does watch the price of gas. But she said she is less concerned than others because her company does cover her mileage while on the job.

The General Services Administration raised the government mileage reimbursement rate for 2002 by 2 cents to 36.5 cents per mile. A study of prices nationwide is the determining factor for this rate and is based on the price of crude oil. During the last 11 years the rates have never gone down; in fact, they have gone up steadily from 25 cents in 1991 to 30 cents in 1995 and 32.5 cents in 2000.

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