Gasoline prices rising in U.S., war or no war

Motorists in Lawrence and across the nation already are paying about 30 cents a gallon more for gasoline than they did a year ago — and should be ready to pony up at least an additional dime a gallon this spring, the Energy Department says.

Even without war against Iraq, oil and gasoline imports from Venezuela probably won’t return to normal before summer — if then.

The Energy Department forecasts gasoline prices nationwide will increase to an average $1.54 a gallon by midspring, about 10 cents a gallon higher than this week’s average, because of rising crude prices and the disruption to oil exports in Venezuela.

The average price Thursday for a gallon of regular unleaded gasoline in Lawrence was $1.44, according to AAA. A year ago, it was $1.11.

Thursday, it took only a hint of trouble with Iraq to force higher the price of crude oil, which is refined to make gasoline and other products.

Crude prices jumped nearly 40 cents, or about 1.2 percent, after the chief United Nations weapon inspector said Iraq still was withholding information about its illegal weapons.

The government forecast also said steeper price spikes were likely in some areas because of supply cuts from Venezuela, where oil production virtually has been shut down for a month by a general strike. Last year, Venezuela shipped about 1.5 million barrels a day of crude and refined gasoline into the United States, about 13 percent of U.S. imports.

Venezuela’s government-owned oil company has one of the largest refining systems in the Western Hemisphere. Its gasoline is sold by Tulsa, Okla.-based Citgo, its U.S. refining and marketing subsidiary.

Al Cooper, 35, Lawrence, fills his tank at Wood Oil, 920 N. Second St. Cooper visited the pump Thursday, the same day that the Energy Department forecast higher gasoline prices this spring, thanks to looming war in Iraq and a national strike in Venezuela.

“The people always ask, ‘Why are the prices high?'” said Mahmoud Kadi, who owns the Citgo station at Ninth and Iowa streets. “I say, ‘You have to ask the companies.'”

The government’s projections do not take into account the turmoil over Iraq and assume that oil from that country will continue to be available at about 2.4 million barrels a day. If war erupts in Iraq, all bets are off on predicting prices, agreed Energy Department petroleum analyst David Costello.

Last year, Iraq produced about 2 million barrels a day on average. Economists and energy experts have said serious worldwide crude shortages could develop if war erupted in Iraq and the country’s imports disappeared while Venezuela’s oil fields remained crippled.

“If there is a war, the price will go higher,” Kadi said, but he seemed unconcerned about the effect on his station. Every station will face an increased price, he said. And people still have to get to work, which means they will buy gasoline.

OPEC oil ministers have indicated they would boost their quotas for crude production by 1.5 million barrels a day when the group meets this weekend to counter the loss of Venezuelan oil.

But analysts have noted that OPEC countries have been pumping about 2 million barrels a day more than their quota as producers sought to take advantage of high oil prices. The actual amount of additional crude flowing into the market may not increase substantially, they suggest.

Despite tight supplies of crude, the Bush administration gave no sign Thursday it was ready to use emergency oil reserves to soften the supply or price impacts, although U.S. officials were lobbying OPEC producers to increase oil output.

“There’s no change in the decisions that have been made,” White House press secretary Ari Fleischer said when asked whether the government’s Strategic Petroleum Reserve might be tapped. He said the purpose of the reserve was to respond to emergencies and implied no such situation exists at this time.