Posted 9/12/01 Legislative committees soon to examine gas price ëspikesí By T.W. Budig ECM capitol reporter Legislative committees are soon expected to hold hearings examining gasoline prices and reasons for price ìspikesî seen at the pump. Sen. Jim Metzen, DFL, South St. Paul, Senate telecommunication, energy and utilities committee chairman, said at a Monday (Sept. 10) press conference he wants to know why Midwestern motorists are paying 30 cents per gallon of gas more than the rest of the nation. ìI guess what we want is some answers,î said Metzen. ìNobody is suggesting gouging. But whatís going on,î he said. Metzen indicated that he didnít believe that a recent refinery fire in Illinois caused the recent price spike felt in Minnesota. He wondered whether it was a lack of refineries, inadequate pipelines, or other factors that have contributed to higher gasoline prices. His Senate committee will be holding hearings within two weeks, said Metzen. Recently, Rep. Gregory Davis, R, Preston, chairman of the House commerce, jobs, and economic development policy committee, also questioned the price motorists are paying filling their tanks. ìItís unbelievable that one day consumers can be fueling up for $1.55 a gallon and the very next day that same gas is nearly $1.90,î said Davis in a recent press release. Davisí committee is tentatively scheduled to meet on Sept. 26. Kurt Bohnen, president of the Minnesota Service Station Association, said the association has asked petroleum producers the same questions about gasoline prices that the lawmakers are asking. ìWe donít get an answer from them,î he said. On average, service stations make about ten cents a gallon on gas, he said. But the margin can vary, he said. Buying bulk loads, service station operators are locked into the price they pay for the load, he said. Itís a little like playing the stockmarket, he said. A busy service station can turnaround a 8500 gallon bulk load of gas in a couple of days, he said. One reason motorists see gasoline price spikes is because the energy system is operating at near capacity and an outage somewhere in the system impacts the entire region, said Darrel Bunge of the Minnesota Petroleum Council. For instance, the latest spike is attributable to a recent fire in a Citgo refinery in Chicago. The refinery accounted for about five percent of production in the Midwest, he said. Repairs will take six months. But petroleum from outside the region has been brought in, he explained. But that takes time. And the marketplace responds to scarcity, he explained. Thereís a shortage of refineries, he said. No new refinery has been built in the United States in 20 years, said Bunge. Environmental laws make it ìvirtually impossibleî to build one, he said. Smaller refineries are driven out of business by the expense of meeting environmental laws, he said. So thereís less than half the number of refineries than 20 years ago, he said. ìI donít think itís possible at all,î Bunge said of the chance of an additional refinery being built in Minnesota. Yet gasoline consumption nationally has been increasing by about six percent a year, he said. He dismisses the notion of price gouging by energy producers. Gasoline is a commodity, said Bunge. Like all commodities, prices fluctuate with the market, he said. Itís just that people notice the price swings with gasoline more readily than they notice the price fluctuations with other commodities ó such as milk. ìThatís because you can price shop (gas) at 30 miles per hour,î he said. A person doesnít have to walk to the back of the supermarket to the cooler to check the price, he said. What the country really needs is to address its energy policy, said Bunge. Energy policy has been ignored for the past 20 years, he said. There are two refineries in Minnesota. According to a spokesman for Koch Petroleum Group in Hastings, that refineries production has increased by about 100,000 barrels a day over the past decade. But not all of the crude oil refined goes towards the production of gasoline, he said. The second refinery is located in St. Paul. ©Post Review