Businesses feel gas price bump

Posted: Friday, March 18, 2005

Kim Davidson said rising gasoline prices negatively impact the business she works for.

"The higher prices kill the independents," said Davidson, manager at Vaughn's Mini-Mart on Kalifornsky Beach Road, a gasoline retailer.

"People aren't moving as much, they're not driving as far, they're not buying gas as often."

Rising gasoline prices on the Kenai Peninsula, like much of the United States, are due to an increase in the price of crude oil and the start of the summer driving season, experts say.

In the Kenai and Soldotna area, the average price of gasoline Wednesday night was $2.28 per gallon for regular unleaded gasoline, Davidson said.

According to AAA Alaska, an automobile association, the average price in the state Wednesday was $2.05 per gallon — the same as the national average.

On the same day in Anchorage, the price was $1.95 per gallon.

When the demand for gasoline goes up, the price goes up, said Kevin Banks, senior commercial analyst for the Alaska Department of Natural Re-sources Oil and Gas Division. This — combined with crude oil prices currently well over $50 per barrel — translates into higher gasoline prices, Banks said.

Steve Hansen, vice president of refining for Tesoro Alaska, said the recent gasoline price increase on the peninsula is similar to the rest of the state. Tesoro's wholesale price of gasoline in Anchorage and in Nikiski is roughly the same, he said.

Hansen said he does not like it when crude oil prices rise.

"I have to buy what the market bears," he said.

Denice Harris, spokesperson for AAA, said rising gasoline prices do not translate into more money for the retail gasoline stations. To get from a barrel of oil to a gallon of gasoline takes many hands with everybody taking a piece of the pie, she said.

The oil companies are the ones benefiting the most from the high prices, she said.

High oil prices can be positive for Alaska's economy, even though Alaskans are paying high prices at the pump, said Matt Berman, economics professor at the Institute of Social and Economic Research at the University of Alaska Anchorage.

This means oil companies in the state have more money, which could lead to more jobs, he said.

However, when crude oil prices are high, it can cause a significant drag on economies that consume a lot of gas, Berman said.

"If oil prices keep going up, it's probably going to send the U.S. economy into recession," he said.

Harris said the automobile association saw an increase in travel in Alaska last year. So far, high gasoline prices do not appear to be discouraging people from travel, she said. However, if prices continue to rise, then that may change, she added.

Will the prices drop?

"It does not look like there is any relief in sight," Harris said.

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