Mayonnaise
03-09-04, 09:14 AM
By Melita Marie Garza
Tribune staff reporter
Published March 9, 2004
Samuel Brown, a Chicago cab driver for 38 years, knows high gasoline prices when he sees them.
"This is almost the worst it's ever been," said Brown, 64. In fact, he said he is taking home about $25-$30 a week less because of gasoline prices that now top $2 for a gallon of regular unleaded at some Chicago gas stations.
"What are you going to do?" asked Brown. "I just have to put up with it."
With gasoline prices at near-record highs nationally, scattered shortages around the country reported, and OPEC production cuts expected next month, Chicago motorists are facing a costly summer driving season.
Prices easily could surpass the Chicago-area record of $2.14 for a gallon of regular unleaded that AAA reported on June 19, 2000, predicted Tom Kloza of the Oil Price Information Service. But those high prices likely wouldn't hit until August, he said.
"You could flirt with $3 a gallon at some gas stations near Lake Shore Drive," Kloza said. "But unless there's major political upheaval in Venezuela, an important supplier of gasoline to the U.S., I don't think it's going to get that much worse."
Stormy street protests against Venezuelan President Hugo Chavez have raised the possibility of another strike at Venezuela's national oil company, similar to the one that briefly shut down oil production last year, contributing to price spikes. Venezuela is the world's fifth-largest oil exporter and a major supplier of crude oil and gasoline to the United States.
Monday, the nationwide average price for a gallon of unleaded regular gasoline was $1.72, 4 cents higher than a year ago and only 2 cents lower than the all-time weekday record of $1.74 reported on Aug. 29, 2003, according to AAA.
The average price in the metro area on Monday was $1.80, 3 cents higher than a year ago at this time.
Prices within the city of Chicago on Monday ranged from $1.90 to $2.10, although one North Side station was selling unleaded regular at a full-service pump for $2.60 a gallon.
An array of factors have helped create the price spike, including increased demand for gasoline in the improving U.S. economy, new requirements for lower-sulfur gasoline, which some overseas suppliers can't meet, and refinery maintenance shutdowns in February and March, said JoAnne Shore, senior analyst for the federal Energy Information Agency.
In January 2003, the U.S. imported 818,000 barrels of gasoline a day. This January, imports were about 200,000 barrels a day short of that amount, while demand ratcheted up about 125,000 barrels a day, Shore said.
"We have a tight market situation as we go through our spring transition," Shore said. "We are watching the supply situation very closely."
Competition for ethanol
What's more, the Chicago-Milwaukee region, which uses a special summer blend of reformulated gasoline, will have to compete with California, Connecticut and New York for blending components. Those states have switched to ethanol-blended gasoline.
"If there is a serious supply problem, Chicago could get some pretty sharp price increases over a short period of time before things settle down," Shore said. "And a problem in California now could really hurt Chicago."
Kloza said that other forces are at play behind the scenes: namely, speculators.
"The rally began Nov. 4," Kloza said. "It doesn't make sense that the pitchers and catchers hadn't reported for spring training yet, and the prices were already on the way up.
"The big money managers have poured in the money. The speculators operate in the shadows; nobody really knows who's moving $200 million out of euros or the peso into oil or gasoline."
On Friday, the Commodity Futures Trading Commission reported that such speculation was at an all-time high, with more buyers than sellers for crude oil and gasoline.
U.S. light crude closed Monday at $36.57 a barrel, down 69 cents, on the New York Mercantile Exchange.
Stubbornly high prices are propped up in part by anticipation of an OPEC supply cut on April 1, which is expected to shave 1 million barrels per day off the cartel's 24.5 million-barrel-per-day crude-production ceiling.
Rethinking vacation
Higher prices may influence vacation plans for Melissa Masterson, 32, a University of Chicago graduate student in public policy who gassed up Monday at the Mobil station at Fullerton and Seminary Avenues. A gallon of regular unleaded gasoline at the station was priced at $1.90.
"I may not drive my car as much," Masterson said, as she spent $15.24 on 8 gallons of gas for her Volvo S40.
"Nowadays I usually fly everywhere on vacation anyway, but they say fuel prices will make that more expensive too," she said.
She confines her Chicago driving to the commute to the U. of C. from her Lincoln Park home and to weekend visits to her parents' Barrington home, where she makes a point of filling up at a cheaper suburban gasoline station. For trips downtown, Masterson said she always takes public transportation.
"Gasoline is up about 10 cents to 20 cents more in the city, depending on which station you go to," Masterson said. "I guess I'm just coming to expect these prices in the city. Although I really thought that with what we were doing in Iraq, we wouldn't have these kinds of problems."
Copyright © 2004, Chicago Tribune
Tribune staff reporter
Published March 9, 2004
Samuel Brown, a Chicago cab driver for 38 years, knows high gasoline prices when he sees them.
"This is almost the worst it's ever been," said Brown, 64. In fact, he said he is taking home about $25-$30 a week less because of gasoline prices that now top $2 for a gallon of regular unleaded at some Chicago gas stations.
"What are you going to do?" asked Brown. "I just have to put up with it."
With gasoline prices at near-record highs nationally, scattered shortages around the country reported, and OPEC production cuts expected next month, Chicago motorists are facing a costly summer driving season.
Prices easily could surpass the Chicago-area record of $2.14 for a gallon of regular unleaded that AAA reported on June 19, 2000, predicted Tom Kloza of the Oil Price Information Service. But those high prices likely wouldn't hit until August, he said.
"You could flirt with $3 a gallon at some gas stations near Lake Shore Drive," Kloza said. "But unless there's major political upheaval in Venezuela, an important supplier of gasoline to the U.S., I don't think it's going to get that much worse."
Stormy street protests against Venezuelan President Hugo Chavez have raised the possibility of another strike at Venezuela's national oil company, similar to the one that briefly shut down oil production last year, contributing to price spikes. Venezuela is the world's fifth-largest oil exporter and a major supplier of crude oil and gasoline to the United States.
Monday, the nationwide average price for a gallon of unleaded regular gasoline was $1.72, 4 cents higher than a year ago and only 2 cents lower than the all-time weekday record of $1.74 reported on Aug. 29, 2003, according to AAA.
The average price in the metro area on Monday was $1.80, 3 cents higher than a year ago at this time.
Prices within the city of Chicago on Monday ranged from $1.90 to $2.10, although one North Side station was selling unleaded regular at a full-service pump for $2.60 a gallon.
An array of factors have helped create the price spike, including increased demand for gasoline in the improving U.S. economy, new requirements for lower-sulfur gasoline, which some overseas suppliers can't meet, and refinery maintenance shutdowns in February and March, said JoAnne Shore, senior analyst for the federal Energy Information Agency.
In January 2003, the U.S. imported 818,000 barrels of gasoline a day. This January, imports were about 200,000 barrels a day short of that amount, while demand ratcheted up about 125,000 barrels a day, Shore said.
"We have a tight market situation as we go through our spring transition," Shore said. "We are watching the supply situation very closely."
Competition for ethanol
What's more, the Chicago-Milwaukee region, which uses a special summer blend of reformulated gasoline, will have to compete with California, Connecticut and New York for blending components. Those states have switched to ethanol-blended gasoline.
"If there is a serious supply problem, Chicago could get some pretty sharp price increases over a short period of time before things settle down," Shore said. "And a problem in California now could really hurt Chicago."
Kloza said that other forces are at play behind the scenes: namely, speculators.
"The rally began Nov. 4," Kloza said. "It doesn't make sense that the pitchers and catchers hadn't reported for spring training yet, and the prices were already on the way up.
"The big money managers have poured in the money. The speculators operate in the shadows; nobody really knows who's moving $200 million out of euros or the peso into oil or gasoline."
On Friday, the Commodity Futures Trading Commission reported that such speculation was at an all-time high, with more buyers than sellers for crude oil and gasoline.
U.S. light crude closed Monday at $36.57 a barrel, down 69 cents, on the New York Mercantile Exchange.
Stubbornly high prices are propped up in part by anticipation of an OPEC supply cut on April 1, which is expected to shave 1 million barrels per day off the cartel's 24.5 million-barrel-per-day crude-production ceiling.
Rethinking vacation
Higher prices may influence vacation plans for Melissa Masterson, 32, a University of Chicago graduate student in public policy who gassed up Monday at the Mobil station at Fullerton and Seminary Avenues. A gallon of regular unleaded gasoline at the station was priced at $1.90.
"I may not drive my car as much," Masterson said, as she spent $15.24 on 8 gallons of gas for her Volvo S40.
"Nowadays I usually fly everywhere on vacation anyway, but they say fuel prices will make that more expensive too," she said.
She confines her Chicago driving to the commute to the U. of C. from her Lincoln Park home and to weekend visits to her parents' Barrington home, where she makes a point of filling up at a cheaper suburban gasoline station. For trips downtown, Masterson said she always takes public transportation.
"Gasoline is up about 10 cents to 20 cents more in the city, depending on which station you go to," Masterson said. "I guess I'm just coming to expect these prices in the city. Although I really thought that with what we were doing in Iraq, we wouldn't have these kinds of problems."
Copyright © 2004, Chicago Tribune