‘We’re Getting Gouged’ Northwest Gasoline Prices Remain High While Rest Of Nation Sees Some Relief

Some travel tips to save money on the road this summer: Pack sandwiches.

Camp out.

Think twice about buying gasoline in Washington and Idaho.

Despite a recent drop in gas prices, drivers in the Northwest continue to pay more per gallon than most of the rest of the nation, experts say.

And that trend is looking increasingly suspicious to consumers - and federal regulators.

“We’re getting gouged,” said Bill Kleinhesselink, a retired Valley businessman who recently traveled through a dozen Midwest and East Coast states. “I thought once I got back to Spokane, I’d be paying $1.30 a gallon. But we’re still at $1.45!”

Oil company officials said they typically charge more for gasoline in the West because there are fewer refineries and sources of crude oil, and distances to transport fuel by pipeline, truck or barge are longer.

But since gas prices began their record run-up in March, the companies have magnified their profit potential in the West by more than 150 percent, according to a U.S. Department of Energy investigation.

From December to April, gross margins - the difference between the average price of gasoline and what refiners pay for crude oil - rose from 13.8 cents to 35 cents a gallon on the West Coast, a 21.2-cent jump. But in the rest of the nation, the margin rose 12.7 cents, from 10.6 cents to 23.3 cents, investigators found.

“We’re getting ripped,” said Tim Hamilton, executive director of the Olympia-based Automotive United Trades Organization, an association of 500 independent gas station owners. “Whereas prices in the rest of the United States have gone down, we’re staying artificially high. It’s pure, 100 percent refinery profit.”

The average price of a gallon of unleaded gasoline at Spokane stations Wednesday was $1.46, down from the all-time high of $1.49 on Memorial Day, according to a survey by the Spokane-based Inland Automobile Association-AAA. At the same time, drivers nationally paid an average of $1.24 per gallon, the federal Energy Information Administration reported.

According to AAA’s figures, Washington has the fifth-most expensive gasoline in the nation; Idaho is sixth. Even after deducting state taxes from pump prices, both states fare poorly, with Idaho the fifth-most expensive; Washington, sixth.

Hawaii, which averages $1.69 per gallon at the pump, has the nation’s highest-priced gas; Georgia, at $1.14, has the lowest, AAA said.

The energy department’s report, which was released last week as part of a Clinton administration investigation into skyrocketing gas prices, parroted oil company explanations for high prices in the West: Gasoline inventories were down while demand went up; a harsh winter depleted heating oil supplies; and a Shell Oil refinery was shut down because of a fire.

“We’re alarmed because those are big price increases,” said John Cook, an Energy Department petroleum expert. “But we’re not that surprised because of the supply problem.”

Mike Libbey, spokesman for San Francisco-based Chevron, which supplies gasoline to Spokane by pipeline from a Salt Lake City refinery, said gasoline is still a great deal.

“It’s cheaper than any liquid commodity other than water,” he said. “It’s cheaper than soda pop, and half the price of milk.”

Americans pay less than most nations. A gallon of gas in Norway is $5.03; in Japan, $3.95.

Drivers entering Canada this week can expect to pay about $1.75 (U.S.) per gallon, said Jim Brown, spokesman for Chevron-Canada Ltd. in Vancouver, B.C. When paying in Canadian currency, that’s 62 cents per liter.

Cook, with the Energy Department, said factors other than crude oil supply and transportation costs also contribute to higher gas prices.

High-cost land, labor and utilities can inflate gas prices, he said. Strong consumer demand for gasoline, coupled with higher income levels in some parts of the country, may encourage oil companies to charge more where they can get it.

“Call it the convenience factor of resort areas,” he said. “People aren’t going to drive 15 miles out of the campground to save a nickel a gallon.”

Hamilton, of the independent stations group, is less forgiving. He blames high prices in the West on an “oligopoly” of five major oil companies. These companies have no competition from outside sources, compared with the East Coast where 20 or more refineries and importers vie for customers, Hamilton said. Refineries in the West, he said, also limit station owners’ ability to shop for lower prices by requiring them to sign exclusive contracts that lock them into buying fuel from specific companies.

“From the well head to the street corner in Spokane, they’ve got complete and entire control over this whole system,” Hamilton said.

Libbey stressed that station owners set pump prices; Chevron and other companies merely supply the fuel at competitive market rates.

The controversy may soon quiet down as gas prices begin to drop. Travelers, moreover, seem unfazed about the cost of fuel as they gear up for a long Fourth of July weekend.

AAA spokesman Ed Sharman in Spokane said the organization predicts that 37.5 million Americans will travel out of town during the Independence Day weekend. That would be the biggest turnout on the nation’s highways in eight years.

“It appears that higher prices are having no effect on travel,” he said.

, DataTimes ILLUSTRATION: Graphic: High prices survive in West