David Gerlitz spoke for a lot of motorists the other day as he filled the tank of his Acura Integra at a Shell service station in Fairfax and marveled at how quickly gasoline prices have risen since Iraq invaded Kuwait nearly two months ago.
"It's crazy," he said, pumping gas at $1.259 a gallon -- a price 2 cents higher than the day before.
Arthur Chandler felt the same way. "I think the oil companies are ripping people off," the retired government worker said as he bought gas at Croom Texaco on Crain Highway in Upper Marlboro. "They jumped the gun too quick -- there was no need to raise prices so much so soon."
Given the way gasoline prices have skyrocketed in recent weeks, the anger is understandable. But things could be worse.
Trading profits for political points, major oil companies appear to be trying to avoid a new round of windfall profit penalties by holding down their gas price increases to less than half of what they could be, given the dizzying rise in the price of crude oil in recent weeks. Voices already are being heard in Congress saying that the companies should pay extra taxes on profits they make as a result of rising oil prices.
Experts say the latest rise in crude oil prices, to more than $38 a barrel, would translate into a 50-cent-a-gallon increase in gasoline prices since Aug. 1 if all the increase was passed on to consumers. The experts noted, however, that President Bush's decision last night to open the Strategic Petroleum Reserve could help dampen the price surge.
Not that the oil companies are altruists. While they've kept a lid on gasoline price increases, they've jacked up the prices of less visible products, such as heating oil and jet fuel, over the past two months.
"To my amazement, gasoline prices have not shot up anywhere near what the price of crude would have indicated," said William Randol, who analyzes oil companies for First Boston Corp. in New York. Even so, the companies are expected to show healthy profits.
"I think the vast majority of companies will find it very difficult to hide all their earnings in the third quarter. ... It's pretty hard to hide a $20 a barrel increase in the price of oil," said Bernard Picchi, an oil industry analyst at Salomon Brothers Inc., the New York brokerage.
Still, gasoline prices at the pump have not risen nearly as quickly as crude oil prices. Since Aug. 3, the day after the Iraqi invasion, the national average cash retail price of unleaded gasoline has gone up nearly 20 cents, to $1.31 a gallon from $1.115 a gallon, according to the American Automobile Association.
Washington area motorists have had it somewhat better -- the result, most experts believe, of an attempt by oil companies to show particular restraint in Congress's back yard.
While Washington usually runs above the national price, the average cash price for a gallon of unleaded in the Washington area is $1.279, according to AAA's Potomac division, slightly below the national figure and up about 20 cents from $1.08 a gallon Aug. 3. (Although the increases are similar in size, the most recent Washington survey was taken a day after the national survey and likely reflects more of the sharp run-up in crude prices over the past week.)
At the gas pump, many local motorists say the increases are hitting home. "It's going up and you can feel it in your pocket," Ted Stein said as he bought gas at an Exxon station in the District for his commute home to Virginia. "Who knows where it's going to stop? It's pretty tough."
At the White Flint Exxon at Nicholson Lane and Rockville Pike, motorist Akwe Ewang said he has switched to a lower-grade gas to save money. "I used to buy the 93 octane grade," he said. "But now I use the medium grade -- and it's still costing me more."
Consumers of other petroleum products are feeling even more pain. Since July 27, wholesale heating oil prices have increased 40 cents a gallon, or 70 percent, to 97 cents a gallon, according to the trade journal Oil Daily. In the Washington area, 11 percent of homes are heated by oil; the rest rely on electricity -- whose price hasn't risen since the Iraqi invasion -- and natural gas, whose price has increased only slightly in the past two months, held down by a supply glut.
Jet fuel prices also have risen sharply since the invasion, nearly doubling since Aug. 1 to $1.17 from 60.83 cents at the wholesale level. Air fares are rising as a result; the industry raised fares an average 5.3 percent at the end of August and are scheduled to raise them another 4.2 percent next week.
Gasoline prices in the United States are so low that some entrepreneurs are buying small amounts of American gas and shipping it to more profitable markets overseas. Not counting taxes, the retail price of gasoline is $2.19 a gallon in Japan, $1.57 in Britain and $1.49 in Germany.
Staff writers Deneen Brown, John Butler, Veronica T. Jennings and Lynne Varner contributed to this report.