With the seas finally relaxing and refineries on the mend, oil is again gushing into the Tampa Bay area.
Ships carrying a total of 24-million gallons of fuel were expected to arrive at the Port of Tampa between Monday and today, said Jim Smith, president of the Florida Petroleum Marketers and Convenience Store Association in Tallahassee. Port Authority officials called it a return to normalcy.
The deliveries will do much to replenish supplies at bay area gas stations, which were simultaneously starved by the recent quartet of hurricanes and ravaged by consumers seeking the security of a full tank of gas. The average price of a gallon of regular unleaded fuel hit $1.885 on Monday, according to AAA Auto Club South.
But events in the Gulf of Mexico and beyond are threatening to push local gas prices considerably higher.
This week, the cost of a barrel of crude oil, the raw stuff from which gasoline is refined, climbed above $50 in the oil futures market for the first time. Analysts blamed hurricane damage to oil refineries and drilling platforms, record demand and political instability in oil-producing countries like Nigeria and Iraq. On Monday, the U.S. Minerals Management Service said daily Gulf of Mexico oil production was 29 percent below normal.
Futures markets are a sort of parlor where gamblers buy the right to buy oil at a given price on a future date. Still, the bets placed there can have a significant if indirect effect on prices consumers pay at the pump. Crude oil accounts for about half the retail price of a gallon of gas.
"Markets react, and you're going to see ultimately a relationship between the price of oil as a commodity and gasoline at the pump," said Dave Mica, executive director of the Florida Petroleum Council. "While we're in a state of emergency right now in Florida and (price) increases have to be justified, I think my industry's done a pretty darn good job of keeping the problem contained."
Not everybody bought the explanations for the record-breaking futures prices. "Crude oil doesn't cost any more to produce today than it did two years ago, when it was trading at $25 a barrel," said Smith, who represents gas station owners. He said greedy oil-producing countries have used idle threats of production stoppages to create panic. "Those people (commodities traders) operate on four principals of business: rumor, innuendo, speculation and fear. It has nothing to do with what's going on in the real world."
Consumers aren't the only victims, Smith added. In recent months, he said, gas station owners have paid rising wholesale prices for fuel but haven't raised their pump prices accordingly. In August, they feared consumers and state officials would accuse them of not honoring the mandatory 8-cent-per-gallon cut in state gas taxes. Today, amid Florida's hurricane-induced state of emergency, they fear unfair charges of gouging.
Despite such caution, diesel fuel prices have risen steeply of late, hitting a bay area high on Monday, averaging $2.035 per gallon. Posthurricane demands from truckers hauling supplies is considered the main culprit.
Gregg Laskoski, managing director for public and government relations at AAA Auto Club South, said he doubted station owners were hurting much. "Retailers have often said that the profit is not found in the sale of gasoline. It's found in things like cigarettes, batteries, soda, potato chips," he said.
Though the $50-per-barrelprice is considered a psychological bellwether for investors, similar to the Dow Jones Industrial Average of stocks crossing the 10,000 threshold, it's not as historic as it might seem.
Adjusted for inflation, today's oil prices are more than $30 below the per-barrel level reached in 1981. The price of a gallon of gas also falls well below inflation-adjusted highs.
Information from Times wires was included in this report. Scott Barancik can be reached at baranciksptimes.com or (727) 893-8751.
WHY OIL COSTS MORE
Pushing oil above $50 a barrel is the alignment of three events:
1. Record-high demand.
2. Historically low spare production capacity, partly because of
3. Potentially destabilizing events in some of world's the top oil-producing regions, including Iraq, Venezuela and, most recently, Nigeria.