Operations

Robert Hansen Interviewed on Soaring Gas Prices

Posted on March 12, 2008

SEATTLE — When gasoline prices hit $2.75 per gallon a few months ago, the president of Bayview Limousine Service, Robert Hansen, tacked a 5% fuel surcharge onto the cost of the ride. He figured it would be temporary.

Now the local average price for gasoline has jumped nearly 13% since late January, and the extra fee, currently 9%, looks more and more like an institution. Hansen might even raise it again this week, as the current amount "doesn't offset the cost," he added.

And the peak summer driving season hasn't started yet. "It's going to be four bucks a gallon in no time," Hansen said.

The average price for a gallon of regular gasoline in Seattle reached $3.475 on Monday, up more than 39 cents from $3.081 in late January, according to a survey by the U.S. Energy Information Administration. The national average for the same grade of gas was a record $3.225, the agency said. The surge comes amid soaring crude-oil prices that have broken the inflation-adjusted record set during the oil shock of the early 1980s.

The Seattle price is exactly average for the West Coast, according to the federal data. Gas prices are higher in western Washington than in most of the U.S. because the region lacks pipelines connecting it to the core of the U.S. refining system, whose main hubs lie in the Midwest, Texas, and Louisiana.

Most of the oil consumed here is processed locally. Although local refineries are pumping more gasoline than ever to supply Washington, Oregon, and California, their production capacity has only grown 4% since 2000, according to a report last year by the state's attorney general.

Gas prices in Washington were on average the 16th highest among the 50 states, according to the state report. Taxes are a key contributor to the price of gas. At 54.4 cents per gallon, gasoline taxes for Washington consumers are the highest in the country, the attorney general's report said.

A big part of the increase in gas prices is caused by the soaring price of crude, which closed at a record $107.90 a barrel Monday, surpassing $108 in intraday trading. Fears of a weakening dollar, along with concerns over a possible armed confrontation between oil producers Ecuador, Venezuela, and Colombia, helped drive the barrel to its new heights.

Bayview Limousine's Hansen said he's doing everything he can to keep skyrocketing energy prices from cutting too much into his firm's bottom line. The company has become "really stringent" on car maintenance, using better-performing synthetic oil and keeping close tabs on tire pressure to make sure the vehicles are as fuel-efficient as can be.

New habits are also being drilled into drivers. "We've instructed our people not to let the cars idle," Hansen said, and to avoid "jack-rabbit starts" that could consume extra fuel.

Source: The Seattle Times

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