Monday, June 26, 2000

Gas prices drop a bit

Midwest supply increasing

By Chris Woodyard
USA Today

        CHICAGO — Record-breaking gas prices in the Midwest are receding as new supplies arrive and motorists change buying habits, a survey released Sunday shows.

        “The crisis is abating,” said analyst Trilby Lundberg, whose influential Lundberg Survey finds self-serve regular gasoline in Chicago averaging $2.12 a gallon. That still has motorists fuming, but the price is actually down 9 cents from a $2.21 peak last week. In the other hardest-hit Midwestern city, Milwaukee, prices fell by 7 cents in two days to $1.96 a gallon.

        Nationally, the average is $1.67, which is up 4 cents a gallon in the past two weeks.

        Prices should ease more as lower wholesale prices, down 29 percent since June 7, show up at the pump, says the American Petroleum Institute.

Price fixing alleged
        The price retreat follows a political furor sparked by soaring prices at gas pumps in the Midwest. The Federal Trade Commission is investigating the possibility of price fixing. Indiana plans to roll back gas taxes next week, and Illinois Gov. George Ryan wants the Legislature to consider suspending the state gas tax.

        The price run-up is being blamed on delivery problems associated with the federally mandated introduction of pollution-reducing gas in the upper Midwest.

        Disruptions in two pipelines, including one that carries 25 percent of Chicago's gas supply, led to shortages. Oil companies sought gas from outside refiners.

        “Everybody's bidding on every barrel they can get their hands on,” said Ken Miller, analyst for the Houston firm of Purvin & Gurtz.

        As a result, “supplies are really building back into the Chicago market,” said Tom Mueller, spokesman for BP Amoco, greater Chicago's largest gasoline retailer.

Drivers change
        But motorists' reactions are also putting pressure on gas retailers. Some motorists, particularly in Milwaukee, venture outside the zones in which cleaner gas must be sold to buy cheaper conventional gas, Mr. Mueller said. Others are simply driving less.

        Shell station operator Thomas Chummar said sales are down 20 percent. A block away, Amoco dealer Sultan Noorullah is trying to maintain sales by giving free coffee and cappuccino to his best customers.

        Cabdriver Imran Khan, pumping $41 worth of gas into his Chevy Caprice, said the small reduction is not enough. He still pays $10 to $15 more a day than a few months ago.


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