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Gas prices squeezing area drivers, stations

By Chuck Chiang / The Bulletin

Published: April 28. 2007 4:00AM PST

Brian Russell can't believe gas prices in Central Oregon are approaching $3.50 per gallon.

The Sunriver resident commutes every day to his workplace in Bend in an SUV and estimated he'll pay more than $250 each month for gas if prices remain at current levels.

The average price of regular unleaded fuel in Bend, as of Friday afternoon, stood at $3.24 per gallon, according to the AAA Fuel Price Finder Web site. Some stations are charging as much as $3.46, surpassing last summer's high of $3.39 in Bend.

"I was joking with a friend this morning that, if the prices keep going and got to $3.75, it may be cheaper to stay at a motel (in Bend) than to drive in from Sunriver every day," said Russell, a chemist.

Russell's exasperation is echoed by local gasoline wholesalers and station operators, who said their profit margins have plummeted in the face of oil companies' rapidly increasing prices this month.

Larry Kimmel, vice president of the Bend Oil Co., said wholesale prices of gasoline in Central Oregon are now ranging roughly from $3.17 to $3.25 per gallon - and they continue to rise.

"Usually, we get updated prices between 4 and 5 p.m. every day," Kimmel said, adding that prices don't always change on a given day. "For the last few weeks, we've seen the prices change twice a day several times. It jumped by 4 cents Monday, another 4 cents midday Tuesday and again by another 4 cents Tuesday evening.

"In my 30 years in the business, this has been the most volatile gas market I've ever seen," he added. "Nobody has been able to keep up."

The current price jump comes before the summer driving season, the typical time period when gas prices surge annually.

According to a McClatchy-Tribune story earlier this week, national analysts said the prices are rising mainly because of the lack of refinery capacity. No refineries have been built in the country since 1976. Crude oil prices also hit their highest levels in almost eight months, reaching $66.46 per barrel on the New York Mercantile Exchange on Friday.

Although gas prices should peak soon, any disruption to current domestic refining processes or the importation of foreign gasoline could push prices to $4 per gallon this year, one analyst told McClatchy.

Bend Oil's Kimmel said the problem is even worse in the western United States, where refineries have come back online slower than expected after switching production to summer-grade gasoline, which is required in California.

"One high-capacity refinery in California was supposed to get back into production two weeks ago," Kimmel said. "It's still not up as of Thursday. If they don't get the capacity up by Memorial Day, you could see (local) prices continue to go up to $4 gallon (unless) people cut back on driving."

Drivers' reactions

Reaction from drivers filling up in Bend on Friday was mixed.

Dick Mitchell, a retiree living in Bend, said he has not changed his driving habits, for the most part.

"We still have to get around," said Mitchell, who drives a pickup. "I'm thinking twice now, whenever I go somewhere, to see if there's something else I can do on the same trip. But it hasn't slowed me down particularly."

But that doesn't mean the higher prices don't frustrate him.

"I think we have to be a little more energy independent," he said. "I think we ought to pump ANWR (Alaska National Wildlife Refuge) and pump the (Gulf) Coast. I think we need to get the oil we have."

Carrie Graeme, a Madras resident whose husband works as a contractor, said higher gas prices will definitely pinch that business's profitability. She noted that the company runs about eight trucks.

On a personal level, however, Graeme said her driving habits haven't changed dramatically.

"It doesn't stop me from driving anywhere," she said. "I'm more apt to take the car now as opposed to the SUV, but I don't really worry about it."

Chemist Russell, however, said he has started staying once a week with his daughter in Bend to reduce travel costs.

"I'm making a decent wage," he said. "I can't imagine how people on minimum wage can afford this."

Darci Cronen, general manager of Red Carpet Express in Bend, said traffic at her gas station has dropped in recent weeks.

"We have lost some volume," Cronen said. "We're as frustrated as everyone else. The big oil companies don't tell us anything. They just give us a price, and we see our margins being cut in half."

Bend Oil's Kimmel said consumers who blame the stations and local suppliers are misplacing their frustrations.

"Believe me, any dealer would love to have lower prices," he said. "But this is a business where most of the profit goes to the top. It's like a blood bath for (stations) right now, with (wholesale prices) continuing to go up, while station owners are hesitant to raise their prices because of the public perception out there."

Chuck Chiang can be reached at 617-7859 or at cchiang@bendbulletin.com.

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