Gasoline prices: get set for more increases soon
Gasoline prices may start rising again soon. Since May, gas prices have fallen an average of more than 3 cents a gallon. But several factors are combining to push prices back up. They include:
* Higher state gasoline taxes. States around the country have been raising gasoline taxes steadily over the past year and a half. Just this month, Colorado, Idaho, Kentucky, Nevada, New Mexico, Pennsylvania, Rhode Island, Vermont, and New York substantially increased their gasoline taxes.
* Gasoline consumption is increasing. According to the American Automobile Association (AAA), driving is up substantially this summer compared with last. Americans appear to be trying to cash in on the drop in gasoline prices as they head to vacation spots. However, increased driving means greater demand, and this is helping to prod prices up.
* Oil companies' rising costs. In New York State, the Legislature recently placed a new tax on oil companies to help underwrite the cost of keeping public transit fares at their current level. Mobil Oil Corporation then boosted the wholesale price of gasoline by 3 cents, saying the new 0.75 percent gross receipts tax has to be passed on to consumers.
Oil analysts also point to more general operating cost increases, which serve to increase pressures to boost prices.
Currently, average retail prices for gasoline are holding fairly steady, although there is still some "softness in prices East of the Rockies," says Warren M. Shimmerlik, a domestic oil analyst for Merrill Lynch, Pierce, Fenner & Smith Inc.
"We're getting close to a stabilization [of prices]," he went on to explain, because "I think in the next month or six weeks we're going to see crude oil prices start to bottom out. When we start to see the point where the price of crude oil doesn't go down anymore, we're going to see [gasoline] prices start heading up again."
He also feels that the costs of refining crude oil "which are always going up" will be another factor in the eventual upturn in gasoline prices.
But in the last month prices continued to fall. According to the AAA's most recent gasoline price survey, published July 3, the national average retail price of gasoline, combining all grades, was down 1.1 cents a gallon from the month before. The AAA surveys approximately 6,000 service stations.
The drop in prices since May has been fed by conservation as well as lower foreign crude oil prices. According to Merrill Lynch's June Montly Petroleum Survey. US petroleum demand "continued its downward trend" in April, "dropping by about 6 percent from year-ago levels. Gasoline deliveries rose seasonally from the previous month [February] but declined 3.6 percent from April of 1980."
The dip in prices since May, however, appears to have helped increase gasoline demand as US motorists take to the roads for summer vacations and long weekends.
Melita Hartung, a spokesperson for the AAA at its national headquarters in Falls Church, Va., says that although the AAA has "no statistics yet on increased driving this summer, this fact is apparent from reports from the field."
Even compared with diesel fuel, which traditionally has been cheaper than gasoline, gasoline prices looked attractive last month. In June, for the first time in six years, the average price of self-service regular leaded gasoline fell below that of diesel fuel, according to the widely respected Lundberg Letter, which conducts a bimonthly survey of gasoline prices nationwide.
New government taxes on gasoline may help to put diesel fuel back in its transitional spot -- lower than gasoline. These increases "are symptomatic of the collector's efforts to adjust to a gasoline market in which he can no longer depend on increasing consumption to prop up his revenue base," according to the July 3 issue of the Lundberg Letter. The letter also states that in the past, taxes have not kept pace with inflation. Moreover, it points out, gasoline taxes in the US relative to other nations historically have been small with taxes a great deal higher in Mexico, Finland, Switzerland, Argentina, and many other countries. Gasoline: still a relative bargain in the US 1. Venezuela $0.31 2. Ecuador $0.80 3. Columbia $0.97 4. Peru $1.08 5. Mexico $1.10 6. Canada $1.14 7. United States $1.45 8. Guatemala $2.09 9. Argentina $2.13 10. Jamaica $2.17 11. Panama $2.30 12. Switzerland $2.45 13. West Germany $2.46 14. Netherlands $2.54 15. Austria $2.56 16. Nicaragua $2.72 17. Sweden $2.74 18. United Kingdom $2.78 19. France $2.79 20. Belgium $2.82 21. Denmark $2.93 22. Norway $2.99 23. Finland $3.04 24. Costa Rica $3.05 25. Italy $3.06 26. Paraguay $4.51 27. Uruguay $4.64 Source: Lundberg Survey, Inc.