top of page

Gas Prices Remain Stubbornly High:

As retail prices for crude oil continue an upward climb, consumers are watching their gasoline consumption closer and thinking twice before traveling long distances.

Crude and gasoline could be in short supply this summer as demand continues to rise, the U.S. continues to import crude and world issues such as the lingering military tension in Iraq continue.

Supply and demand will prove a telling indicator for when, and if, prices decrease. Those in the industry say they don't see prices coming down anytime soon, and may remain high until fall. Nobody from the industry wanted to speculate on how high prices will climb before leveling out.

"It's really anybody's guess as to when prices will go down. They'll be up for awhile and that's about all everybody knows," said Bill LaCrosse, president for Empire Oil.

This year, the price increase that usually begins during summers tourism season started early, as demand for heat rose following this winter's bitter cold.

Gasoline prices have increased predominately because refiners are paying more for their product. On average, crude prices have increased 16-cents per gallon and gasoline has increased some 23 cents per gallon nationwide.

In North Dakota, the increase is slightly below the national average with the most recent price for unleaded sitting at $1.79 and $1.81 for super unleaded.

Unrest in crude producing countries such as Venezuela, Nigeria and Iraq contribute to the increases, as do domestic problems such as refinery and pipeline outages.

Worldwide, the Organization for Petroleum Exporting Countries announced that it cut it's output by 1,000,000 barrels a day, to 23.5 million barrels in an effort to stabilize the market, further decreasing supply.

Today, the U.S. imports 62 percent of its total crude oil, the base product used to make gasoline. Currently, one barrel costs $37.85, compared to $24.09 in 2002.

"Our nation's refiners are having to pay those high world prices for crude oil and we are seeing those high prices passed onto the pump prices," said Rayola Dougher, senior policy analyst for the American Petroleum Institute.

Dougher said that Asia's demand for crude grew 30 percent last year and will continue to grow, further squeezing supply.

In the Midwest, harvest season increases demand for diesel fuel during the spring and fall during the seeding and harvesting seasons with farmers utilizing large farming rigs.

Retail stores are becoming more dependent upon the sales of concessions inside convenient stores to keep business profitable.

"If a person had to survive on gasoline sales alone, I don't think many would be able to make it," said Leif Peterson, a spokesperson for the TeSoro Refinery in Mandan.

For one gallon of gasoline costing $1.84, a total of 90 cents is going to the cost of crude oil, 21 cents to state tax,18 cents to federal tax and the remaining amount is used for manufacturing and transportation costs.

Local retailers and manufacturers say they too are feeling the crunch.

"Everybody thinks that the oil companies are making really good money. What they don't realize is that the cost for drilling, steel and labor also increase," LaCrosse stated.

Ron Green, manager for OK Tire, foresees steeper increases in the next few weeks as the tourism season gets underway. "We've seen prices this high in the past, but maybe just not this early," he said.

According to API, state and federal investigations have been done on the industry in years past on price hikes and have found no evidence of wrongdoing, but have instead found that market forces determine price, with demand exceeding supply.

bottom of page