It only seems expensive.
That's part of the good news - gasoline today being cheaper than in years past if you index for inflation. The rest is that pump prices are likely to come down this summer when an impending glut from Iraq offsets a nationwide shortage of crude oil.But that's not much solace for Memorial Day motorists, who will pay upwards of $1.40 a gallon this holiday weekend, depending on where they drive.
According to the state Office of Energy and Resource Planning, the average price of a gallon of regular unleaded around Salt Lake County in recent days has been $1.37. And urban Salt Lake remains one of the cheapest markets in the region. Spot checks on Wednesday elsewhere in Utah and in the West show the cost of the lowest-grade of gasoline approaches and even exceeds $1.50.
Industry experts say consumers need to keep the pain in perspective, however.
"Gasoline has been one of the best long-term buys of any product," said Jim Peacock, executive director of the Utah Petroleum Association, a group whose members included gasoline retailers, oil-exploration companies and refineries.
"Today's price, in terms of inflation-adjusted prices, remains lower than the price in 1960," said Kevin Duffy-Deno, chief economist for the state's energy office.
To illustrate his point, Duffy-Deno harkens back to a pair of occasions in modern history when Salt Lake County gasoline prices went through the roof:
- Iraq's invasion of Iran in 1981 saw local prices average $1.35, but when measured in 1996 dollars they were closer to $2.22.
- During the Persian Gulf conflict in late October 1990, regular unleaded prices averaged $1.29 - $1.50 in today's dollars.
None of this means the public is pleased by a sudden increase that saw pump prices last month jump suddenly by 20 percent and stay there.
"We've been receiving a lot of calls," said Gene Inglesby, regulatory affairs director for the Western Petroleum Marketers Association, which represents independent retailers in Utah.
"For some reason, everybody blames me when gas prices go up," added Peacock, who said complaints have been numerous and heated.
Consensus in the industry explains $1.37-a-gallon gasoline by invoking supply and demand. A hard winter combined with a delay in an anticipated repeal of trade sanctions against Iraq caused the shortage, according to conventional wisdom.
Peacock said it goes deeper than that, though.
"This country has got itself in a very dangerous situation . . . relying on foreign sources for more than half its oil," he said. According to Peacock, the United States during April imported 9 million barrels of crude oil daily but produced only 6 million per day.
Utah feels the shortage through a ripple effect that starts in California and today is sapping the state's five big privately owned refineries.
"There's a heavy run on us from Nevada because their usual supply from California has been reduced and diminished," said Peacock.
Refineries in Utah in recent years have relied more and more on oil from distant sources as fields in the Intermountain West have gradually reduced output. Too, "Refinery Row" in North Salt Lake is geared for sweet, light crude, a form hard to come by in this region.
But Peacock noted a slight downturn earlier this week in market crude prices, and Duffy-Deno said it's a sign of things to come.
While mercantile trading topped $24 a barrel in late April, it was selling this week for just over $21. Late-summer futures are going for $19 a barrel now, he said, and year-end futures are $18.50.
Expectations for better supplies are tied to estimates that U.S. imports from Iraq will eventually total 700,000 barrels a day before the year is up.
Ultimately, said Duffy-Deno, pump prices will reflect the resulting drop in crude costs.
"In short, gasoline prices are expected to fall," he said.
Gas prices: MEMORIAL DAY
Cost comparison of a gallon of regular unleaded gas:
St. George $1.40
Park City 1.43
Las Vegas $1.48
Los Angeles 1.50
W. Yellowstone 1.55
Lake Tahoe 1.60
San Francisco 1.64
Rock Springs 1.26
Jackson Hole 1.46
Crude oil: PRICE PER BARREL
May 1993 $19.48
Nov. 1993 $16.63
April 1994 $16.58
Sept. 1994 $17.83
April 1995 $19.07
Oct. 1995 $17.41
Dec. 1995 $19.14
April 1996 $22.38
May 1996 $21.35
SOURCE: New York Mercantile Exchange
Gas tax: PER GALLON
SOURCE: Western Petroleum Marketers Association
FEDERAL TAX 18.3 per gallon