One year ago, the average price of a gallon of regular unleaded gas in the Eugene-Springfield area was $1.14, according to the American Automobile Association. Now, the average cost for the same gallon of gas in the same area costs $1.81.
While the 66.3 cent difference may not seem like that much of a price increase, multiply it by 12 gallons, and the amount of money jumps from about 66 cents to almost $8.
In an interview with the Salem Statesman Journal, Oregon Gasoline Dealers Association President Brent DeHart explained why there was an increase.
“The barrel of oil is so expensive,” DeHart said in the interview. “It’s a worldwide commodity, and it’s a supply and demand product. When there are fears of a shortage, like there are right now, the price goes up.”
The fear of a shortage comes from several factors, including the recently-settled production strike in Venezuela and speculation of a possible oil shortage that a U.S. attack on Iraq could create.
“The United States does not get its oil from Iraq, so the lack of supply there wouldn’t affect us,” DeHart told the Statesman Journal. Except “all those who do get it there will be trying to get it from the places where we get it. That affects supply.”
Senator Ron Wyden, D-Ore., has conducted two in-depth researches into gas price increases and why they occur.
In his most recent paper, Wyden presented documentation from corporations such as Texaco, ARCO and Chevron. Within the documents, some of which are said to be internal, Wyden found the corporations practice “zone pricing.”
According to Wyden’s first paper, published in June of 1999, zone pricing is when “oil companies base prices on the most effective way to maximize profit for the oil company in arbitrary geographic areas, or ‘zones.’” Wyden said in some cases, zone pricing could involve lowering prices in order or capture high volume. It also could involve increasing prices, too, as competing stations drive up consumer costs.
It is DeHart’s opinion, however, that when the price of gas increases it has a negative effect on the retailers who sell it.
“The demand goes down, (retailers’) expenses go up,” he told the Statesman Journal.
Federal courts have ruled that charging various prices for gasoline to two buyers that are in competition with each other violates the Robinson-Patman Price Discrimination Act. The act prohibits manufacturers and suppliers from providing price discounts to some buyers and other forms of preferential treatment. Wyden, however, found instances where “oil companies’ zone pricing has resulted in their paying higher prices and losing business to nearby service stations selling the same brand of gasoline.”
According to Elliot Eki, who works for AAA, the not-for-profit organization hasn’t felt a negative effect with the increase in gas prices.
AAA is known for its roadside services — towing a car when it is broken down or bringing gas to its members when they run out — as well as its travel agency, car buying service and auto travel planning.
“Normally when there’s a large fluctuation (in gas prices), Emergency Roadside Service lets me know,” Eki said. “I haven’t heard (about) any effect yet.”
Many University students are aware of the increase in prices, though, and subsequently have cut back on how much they drive.
“I try to drive less,” sophomore Josh Welch said. “I try to take the bus to school as much as possible.”