Increasing demand, seasonal shut-downs send prices soaring

Rocketing Oregon fuel prices made commuters and trucking company officials alike sweat this week, but analysts say it could get much worse before it gets better.

The average regular gas price in the Rogue Valley was $2.06 a gallon Friday, up from $2.04 a gallon Thursday and $1.99 a gallon Tuesday, according to the AAA’s Fuel Gauge Report. Diesel prices climbed from $2.29 a gallon Thursday to $2.33 a gallon Friday.

Soaring prices in the Rogue Valley were in line with statewide averages, the AAA’s daily report shows. Oregon’s average price per gallon for regular gas was $1.97 Friday, up two cents from Thursday. Statewide, diesel was at $2.34 Friday, up 14 cents since Tuesday.

"That’s hard on the transportation business," said Scott Fowler, general manager of Medford-based Cross Creek Trucking Inc. "With so much fluctuation, there’s no way to keep up."

Oil Price Information Service, a Wall, N.J.-based company that compiles industry data, predicts that national gas prices — now at $1.90 a gallon — could jump to $2.20 or higher this spring. Prices likely wouldn’t linger long at that level, company analysts reported.

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The spike could be even higher in Oregon, said Elliott Eki, a AAA spokesman in Portland.

"If you figure how much Oregon is leading the national average now, it could top $2.50 here," he said.

"That would really hurt," said Jeff Rose, of Medford, who was buying $5 worth of gas Friday at the Astro station on North Central Avenue.

He said current gas prices make him think about where he is going and try to map out strategies to reduce daily driving. If prices continue to climb, he’ll plan trips even more carefully.

Rocketing prices result from increasing world and U.S. demand and seasonal shut-downs at refineries as they switch from making winter-blend gasoline to summer-formula fuel, Eki said.

Helmut Kanzler, of Yreka, already has a strategy for dodging high gas prices — filling up in Medford instead of at home, where gas cost about $2.30 a gallon on Friday.

"I fill up whenever we come here," he said as the Astro station attendant topped off the tank of his station wagon and filled a gas can besides. "I can save 25 or 30 cents per gallon."

Eldon Church, of Battle Ground, Wash., was also gassing up at Astro to avoid California’s higher prices. On his way to his brother’s wedding in Modesto, Calif., he paid $1.71 a gallon to fill his 5-month-old Chevy Suburban’s tank before leaving home. The Medford station’s $2.05 price was steeper, but not as much as he expected to pay in California.

Managing high fuel costs is tougher for Cross Creek, which has a fleet of about 100 tractor trucks and 145 refrigerated trailers plying the Interstate 5 corridor, Fowler said.

Fuel surcharges, a fee trucking companies charge customers to try to cover high diesel costs, are calculated on a weekly basis and can’t match rapid changes like those seen this week, he said. High — and volatile — fuel costs have been the rule for the past two years.

"It’s really made it a challenge to stay profitable," Fowler said.

Cross Creek fuels all its trucks at one company to get bulk discounts. It’s also worked to boost fuel efficiency and cut idling times for trucks. The company is even considering biodiesel, he said.

AAA figures show gas prices are up about 20 cents from a year ago and not far off last spring’s record high of $2.32 in Oregon and $2.05 nationally.

Though it hurts to see prices go up, a U.S. Department of Energy analysis indicates that these prices, when adjusted for inflation, take a smaller bite out of our wallets than gas did 20 years ago. Even as far back as 1919 when prices were about a quarter a gallon, the real cost was close to three bucks in 2005 dollars, according to the analysis.

For more information, visit www.eia.doe.gov, click on "Gasoline and Diesel Fuel Update" and then "Real Petroleum Prices" below the fuel pump graphics.

Reach reporter Anita Burke at 776-4485, or e-mail aburke@mailtribune.com