Caught Over a Barrel
"It's just simply misplaced outrage," says Mikkelson. "We are accustomed to gasoline being a certain price and when it goes up there must be something terribly wrong in our world. There's got to be someone to blame."
Geoff Sundstrom, a spokesman for AAA, says consumers shouldn't blame the oil industry: "It's not that there is a conspiracy or any one or two oil companies have gotten together and decided to raise prices and make maximum profits. The issue is that the industry is really not the master of its own destiny."
AAA recognizes that crude oil is the driving force behind the high gas prices, says Sundstrom.
But what's a mishmash, he says, is clean-air regulations: Various laws currently require 18 blends of gas be sold across the country -- sometimes county by county, like in California where the average price for regular last week was $2.16. Four blends are sold in various locations in Virginia, Maryland and the District.
Those "boutique blends" are "almost like microbrewed beers," says Sundstrom. "They're made in small batches and are very expensive."
A Crude Calculation
Edward Cowan is talking gas as he reaches for the orange beef and spring rolls. At a banquet upstairs at Washington's Chinatown Garden restaurant, three dozen members and guests of the National Economists Club, a nonprofit educational foundation, wait to hear the American Petroleum Institute's chief economist, John Falmy, answer this timely question: "What's Up With Gasoline Prices?"
Up indeed. Between bites, Cowan, a club member, runs through his list of his favorite low-priced gas stations, from Kensington to Fredericksburg. The District resident includes the Sunoco in Arlington. "I think the idea that you're buying smart has as much appeal as saving the money," says the retired New York Times correspondent.
At the podium, Falmy's theories go straight to Big Oil's bottom line. As the national trade association of the oil and gas industry, API tends to get defensive whenever prices shoot up.
Who can blame it? The fuming public seems to have no doubt that the slick multibillion-dollar oil industry is manipulating the market for bigger gains. At every big price hike, even politicians call for "price gouging" investigations.
But Falmy brought impressive numbers. "Gasoline prices are the most known price in our economy," he says, arguing that everyone knows exactly what they paid for gas this morning but nobody knows exactly what they paid for milk. (He does not suggest that if we bought 20 gallons of milk every week, the price of milk -- expected to reach nearly $4 a gallon this summer -- might be on the tip of our tongues.)
"Does anybody know what the price of crude oil was yesterday?" he asks.
Someone says $30. Another, $38. "It was $37.60," says Falmy. "But how much was that in cents per gallon?"
Too hard even for "Jeopardy!," the question stumps this group of economists: "Fifty-five cents?" "Forty-two cents?"
Falmy says triumphantly that, as of the day before, the price was 89.52 cents. "That's roughly 40 to 50 percent of the cost of a gallon of gasoline," he says.
Get it? Follow the crude. That's the main culprit behind pump prices, not the industry. That's the API's take on the gas-price mess.
© 2004 The Washington Post Company