Paying at the pump

Threat of war, Venezuela issues driving prices past $1.75 per gallon mark

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— Matt Voiland was standing under the canopy at the 7-11 on Steamboat's west side Thursday morning pumping $10 of the least expensive gasoline in town into his Suzuki Sidekick.

Voiland was wondering how he would pay for his next tank.

"I just quit my job. I guess I'll eat more lo mein noodles," Voiland said.

The little Suzuki SUV gets about 20 miles to the gallon, Voiland said, but he drives back and forth between Steamboat and Clark each day.

"I put $10 in every day," he said. Unleaded regular was selling for $1.719 at 7-11, but that was an exception to the rule in Steamboat last week. An informal survey showed gas prices ranging from $1.769 to $1.799.

Voiland's challenge is different from that of Doug Marsh, who has 125 fuel tanks to top off.

Marsh is public works director for the city of Steamboat Springs. His department maintains and fuels all city vehicles with the exception of Steamboat Springs Transportation buses. Snowplows, fire trucks and Chevy Blazers -- they're all thirsty. The only saving grace is that the city is exempt from gasoline taxes.

"This highest invoice we've paid this year is $1.19 for unleaded and $1.04 for diesel," Marsh said. But that doesn't mean he isn't sensitive about recent price increases.

When Marsh fills his two bulk tanks, he orders 4,000 gallons of diesel in one and a like amount of unleaded in the second tank. He typically expects to pay $8,000 for a fill up, and budgets to spend $75,000 annually on fuel.

"We budgeted for what we spent last

year," Marsh said. "Who would have thought this would happen and with the potential for war, we'd be paying 15 to 20 cents more for gas? It will be a hit to us at the end of the year unless prices drop."

As a city official, Marsh doesn't see the increase in fuel prices on a profit and loss statement, but he knows the city will have to make up any shortfall out of reserves.

Luke Magistrelli, an independent excavating contractor from Woodland Park, said he is passing the costs along to customers. Magistrelli was filling up a Chevy Z71 and a couple of high-powered snowmobiles at 7-11 Thursday. He said he has nine vehicles for business use. Fuel is costing him an extra $200 to $300 a month.

Magistrelli's friend, Dennis James of Steamboat, said the big snowmobiles demand more expensive premium gas. He expects to pay $1.80 a gallon for 10 gallons of gas that will allow him to run his sled 17 miles in a day. But he was philosophical about the money.

"You do what you have to do," James said. "You work harder."

Mary Greer of AAA suggested there is an option to working harder. People can change their driving habits and take better care of their vehicles.

Vehicles that aren't overdue for a tune-up, have properly inflated tires, topped off fluids and belts and hoses that are in good shape can save $8 on every $40 of gasoline Greer said. And stopping at the grocery store on the way home from work instead of making a separate trip can save even more money.

Still, Greer is puzzled by a jump in gasoline prices that is more typical of July than February.

"This time of year is a low demand time, but gas prices are higher than last summer," Greer said. "Where is the increase coming from? This is so unusual. We've never seen prices so high in what is typically a low demand season."

Retailers get the brunt of the blame, Greer said, but her research indicates there margins are low.

"I spoke to a Denver retailer who is paying $1.51 wholesale and charging $1.59 retail," she said.

Analysts say the price of crude oil is being influenced this winter by anticipation of a U.S. war on Iraq, the recently concluded strike in Venezuela and chaos in Nigeria. A cold winter in the east is forcing a shift in production from gasoline to heating oil. And U.S. reserves are currently the lowest in decades.

Longtime Steamboat retailer and gas station operator Rod Schrage said he has seen his margins shrink even as the price on his Conoco pumps escalate.

"I understand that no one is going to feel sorry for me, but wholesale prices are going up nonstop," Schrage said. "We're chasing the price of gas. I can't tell you if the price of gas will go up or down tomorrow. There's no rhyme or reason to it. Gasoline prices are very volatile right now."

Schrage said that for the last month he has seen the wholesale price go up by one or two cents per gallon with each new delivery, and in a couple of cases by a nickel.

"I can tell you that there is no gouging going on at the retail level," he said. "Retailers are the ones that lose because they are reluctant to raise prices and wholesale keeps rolling up. I guarantee you there's no gouging, because our marketplace doesn't allow it."

Schrage acknowledged that retailers will be slow to drop their prices if the price of wholesale gas retreats this spring.

"When the price falls, we have a tendency to say, 'Oh man, maybe we can make some money for a change,'" Schrage said.

Greer agreed there is a tendency among consumers to focus on retailers when gas prices rise dramatically. She said part of the reason gas prices are higher in ski communities is that a peak demand occurs in the winter. Prices are naturally a function of supply and demand.

As a businessman who sells gas, Schrage is outspoken about national energy policy, and expresses frustration that more isn't being done to promote development of alternative fuels.

"I have a really hard time with our gasoline policy to begin with," Schrage said.

Marsh expressed similar sentiments. "I can't believe we're still dependent on that stuff," Marsh said. "If I were president, I'd spend $10 billion tomorrow on developing alternative fuels."

-- To reach Tom Ross, call 871-4205 or e-mail tross@steamboatpilot.com

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