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Gas prices speeding toward $4-a-gallon

10:34 AM EDT on Thursday, May 22, 2008

By Peter B. Lord
Journal Staff Writer

Gasoline prices across Rhode Island continued climbing this week with most premium blends selling for more than $4 a gallon, and even regular threatening to cross the same unprecedented benchmark.

More disturbing news faces Rhode Islanders planning to drive out of state for the holiday weekend. In some places, particularly Connecticut, fuel prices are even higher.

What’s worse, oil experts are not predicting relief anytime soon.

The price of light, sweet crude oil for July delivery rose $4.19 a barrel yesterday and settled at $133.17 — another record high in a period when records are being broken almost daily.

Frazzled motorists are shopping hard for the best prices at the pump, but even the lowest prices are dramatically higher than ever before.

One Web site, gasbuddy.com, relies on motorists to report prices. Last night the site published lists of what it says are the 15 least expensive gas stations and the 15 most expensive in Rhode Island.

The most expensive was identified as a Mobil station at Route One and Dunn’s Corner Road in Westerly, charging $3.99 for regular. A clerk who answered the phone last night said it was against company policy to quote gas prices on the telephone.

Four other Westerly gas stations were in the top 15, along with four other gas stations nearby in Charlestown and Ashaway.

The Web site said the cheapest gas in Rhode Island was being sold by a Cumberland Farms store on Warwick Avenue in Warwick. The site said the store was selling gas at $3.75, but that price was quoted on Monday.

Last night, the price was $3.81. A young mother pumping some gas there stopped to voice her exasperation to a stranger at the next pump.

“What’s going on here?” she exclaimed. “When is it going to end?”

She said she used to spend less than $20 to fill her car. Last night she spent $28 and the tank still wasn’t full.

Inside, two young clerks said they know motorists are frustrated.

“They kind of blame us,” said Aubrey Garafolo. “If we could bring the prices down, we would. But the bulletins keep coming in to raise the price, and that’s what we do.”

Not long ago, when the station charged $3.50 a gallon, the price was higher than most competitors and the gas station was very quiet, she said. Last night it was busy.

So was a Hess station around the corner on Airport Road. It too was charging $3.81.

But on the other side of the airport, along Post Road, there were plenty of empty pumps at a Mobil station charging $3.95 for regular. It was the same down the road at a Shell and an Exxon station. Located within a block of each other, each charged $3.89 for regular.

The American Automobile Association of Southern New England predicts this will be the first Memorial Day holiday since the terrorist attacks of 9/11 that motorists will actually drive fewer miles than in the past.

If it’s any consolation, congressmen got to vent some fury at oil company executives in Washington yesterday.

“Where is the corporate conscience?” Sen. Dick Durbin, D-Ill., asked the top executives of the five largest U.S. oil companies.

It’s all about economics, came the reply. Supply and demand. The company leaders tried to shift attention from motorists’ anger over $4-a-gallon gasoline to a debate over new areas for drilling.

But senators at the Judiciary Committee hearing weren’t having any of that.

“People we represent are hurting, the companies you represent are profiting,” Sen. Patrick Leahy, D-Vt., told the executives. He said there’s a “disconnect” between legitimate supply issues and the oil and gasoline prices motorists are seeing.

The executives, sitting shoulder to shoulder in the hearing room, said they understood people were hurting, but they tried to blunt the emotion with economic analysis.

Profits have been huge “in absolute terms,” conceded J. Stephen Simon, executive vice president of Exxon Mobil Corp., but they “must be viewed in the context of the massive scale of our industry.” And high earnings “in the current up cycle” are needed for investments in the long term, including when profits will be down.

“ ‘Current up cycle,’ that’s a nice term when people can’t afford to go to work” because gasoline is costing so much, replied Leahy with sarcasm.

Simon was joined by executives from Shell Oil Co., Chevron Corp., BP America Inc. and ConocoPhilips Co. Together the five companies earned $36 billion during the first three months of this year.

Rhode Island Democratic Sen. Sheldon Whitehouse, who chaired a portion of the hearing, said afterward, “While consumers in Rhode Island and throughout the country pay nearly $4 a gallon for gas, oil companies continue to defend their obscene profits and act as if nothing’s wrong.”

With gas and oil prices setting new records on a daily basis, many analysts are beginning to wonder whether anything can stop prices from rising. There are technical signals in the futures market that crude may soon fall. But with demand for oil growing in the developing world, and little end in sight to supply problems in producing countries such as Nigeria, few analysts are willing to call an end to crude’s rally.

Analysts say crude has been boosted in recent days by especially strong demand for diesel in China, where power plants in some areas are running desperately short of coal and certain earthquake-hit regions are relying on diesel generators for power.

The dollar, meanwhile, weakened against the euro yesterday. Investors see hard commodities such as oil as a hedge against inflation and a weak dollar and pour into the crude futures market when the greenback falls. A weak dollar also makes oil less expensive to buyers dealing in other currencies.

AAA provides data on average gasoline prices in Rhode Island and elsewhere in New England at www.fuelgaugereport.com/RImetro.asp.

The Web site said the average prices of regular gasoline in the Rhode Island metro area yesterday was $3.85. The average for premium was $4.23.

Regular in the Boston area yesterday averaged $3.79. In New Hampshire it was $3.72. In Vermont it was $3.77.

But in Connecticut, the average price of regular gasoline yesterday was $4.13. Premium was $4.85.

Just a month ago, the average price of regular in Rhode Island was nearly 40 cents lower, at $3.46.

And a year ago, it was just $3.

Material from the Associated Press was included in this report.

plord@projo.com

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