Sean Morgan and
Scott Swanson
Of The New Era
The surge of fuel prices over $3 a gallon for both gasoline and diesel over the last week has left managers at local businesses and government agencies scratching their heads and reworking their budgets — and gas station customers cranky.
In the last two weeks, the national average price for a gallon of regular gasoline rose to more than $3 a gallon. Prices in Sweet Home stayed there most of the last week while, statewide, the average rose to $3.04 for a gallon of regular gasoline.
“I can’t really see a slow-down in the traffic even though the price is high,” said Ken Munts, owner of the Chevron station at Main and 18th.
But, he said, people are complaining about the prices as usual.
“I would predict it to keep going up further,” Munts said.
Elliott Eki, public affairs director for the Oregon AAA, said that oil prices dipped below $70 a barrel for the first time in several weeks last week, giving some hope that pump prices might follow.
“The statewide average gasoline price is also down one-tenth cent since Monday,” Eki said last week. “While that’s not much, it is some cause for optimism that prices might begin falling soon.”
But analysts say motorists should not expect large price drops – and may find that prices might continue to rise. In addition to the coming hurricane season, simmering global political issues increases the possibility of a major oil supply disruption. Market analysts expect that as political tensions ebb and flow, so will crude oil prices.
Conversion to the cleaner-burning summer fuel is near completion and pricing pressure has eased a bit. On Wednesday, the Department of Energy will report its weekly inventory estimates, and if supplies show a healthy growth, a gradual price reduction is expected between now and the Memorial Day weekend.
Milt Moran, director of sales and logging operations for Cascade Timber Consulting, said the fuel prices are driving up the costs of logging operations for his company and its subcontractors. He said it’s particularly difficult for loggers who are working big jobs that take an extended period of time to complete and who have agreed to a set price for their work.
“These fuel prices make it tough,” he said, noting that in January of 2005 diesel was approximately $2 a gallon, a dollar less than it is now. “It’s costing folks unless we can compensate them for it. For a while there, we did a fuel surcharge for trucks. Now we’ve just made adjustments in rates (of contracts).”
School District 55 Business Manager Kevin Strong said that the district is looking at paying $25,000 more for fuel for the coming fiscal year than for the current year.
“We have budgeted $115,000 for our transportation department’s fuel cost during the 2006-07 fiscal year, a $25,000 increase over the 2005-06 fiscal year’s budget of $90,000,” he said. Strong said that actual transportation department fuel costs have risen from $54,219 in 2002-03 to $74,802 in 2003-04 to $80,548 in 2004-05. The state reimburses 70 percent of the district’s transportation costs, but the district must cover 30 percent of cost inccreases, he said.
“Every additional dollar spent on fuel means one less dollar we can spend in the classroom,” Strong said, adding that the district should finish close to budget on fuel this year. The district factored in higher prices in its 2005-06 budget.
Sweet Home Police Chief Bob Burford said his department was was paying $2.81 per gallon on Monday through Metro Fueling. The same company was charging $3.25 per gallon in Portland.
The city is budgeting an average gas price of $2.80 per gallon for its proposed 2006-07 budget. It budgeted $2.50 per gallon for 2005-06.
“We’re overspending that line item right now,” Burford said, but he noted that at other times this year, the price has been under the city’s projected fuel costs.
“Fuel is one of those things we can do very little with, so we end up cutting back on other things,” he said. Cuts can include foregoing things like training for officers.
“We don’t like to pay it, but there’s very little we can do about it,” he said.
Last year, the department put approximately 150,000 miles on its fleet. A new Chevrolet Impala patrol car is expected to improve fuel consumption, Burford said. The Impala gets about five miles per gallon better mileage than the old Ford Crown Victoria it is replacing.
At $3.04, Oregon’s average gasoline price was eighth-highest in the nation. Hawaii has the highest statewide average price at $3.40. California’s is up to $3.37; Nevada’s is up to $3.17; Washington’s is $3.10, and Idaho’s is $2.87. Oklahoma has the lowest average price at $2.69.
Analysts at the Oil Price Information Service, which provides AAA with fuel data, continue to forecast that fuel prices could fall by as much as 15 cents per gallon by mid-June. But, they say the falling prices will stabilize once the hurricane season arrives, which will spark fears that Gulf Coast fuel production could be disrupted.
“We’re not happy either,” said Marv Volkers, an attendent at the Union 76 station, of the fuel prices. He said he hasn’t seen much of a dropoff in traffic through the station, though he’s seen a rise in complaints about prices.
“People don’t buy gas like they used to (years ago). They buy it because they need it.”