Gas prices approaching $3 per gallon in Maine

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Maine may be far out of reach of the devastating floodwaters caused this week along the Gulf Coast by Hurricane Katrina, but residents of the northernmost New England state found themselves being overtaken Wednesday by one of the storm’s harsh economic effects.

Gas pump prices in Maine have skyrocketed 25 cents or more since Tuesday morning, pushing gasoline prices close to $3 per gallon and, for some higher grades of fuel, even higher.

“It’s going up almost every night,” Bruce MacDonald, manager of the B-Gas Mobil station on State Street in Bangor, said Wednesday. “I guess the storm had a lot to do with it.”

Jamie Py, president of the Maine Oil Dealer’s Association, said that between Tuesday morning and Wednesday the per-gallon price of gasoline futures on the New York Mercantile Exchange surged 47 cents.

“The wholesale numbers have gone up dramatically,” Py said Wednesday. “This most recent spike is being caused by the Gulf Coast issue.”

Many oil companies operate refineries along the coast of the Gulf of Mexico, where Hurricane Katrina caused extensive damage Monday as it slammed into the shore with 145-mph winds. As of Wednesday many of the Gulf Coast’s oil refineries and pipeline links, which together provide about one-third of the country’s gasoline supplies, remained closed down because of the storm’s residual effects.

Py said fuel prices are likely to remain volatile in the near future.

“It’s hard to see where we’re going to be in a week or two,” he said. “Obviously, consumers are going to be upset, and rightly so. Prices are outrageous.”

The spike in prices has not gone without notice from state officials and even has prompted one Maine legislator to question the increases. Maine Senate President Beth Edmonds wrote to state Attorney General Steven Rowe on Wednesday, asking him to determine whether the sudden hike in prices can be considered “profiteering,” according to a statement released Wednesday evening by Edmonds’ office.

Prices at one gas station in Freeport on Wednesday rose 40 cents “in the span of a few hours,” Edmonds indicated in the statement.

“I want to make sure all possible means are researched to stem the extreme increase of fuel costs here in Maine,” Edmonds wrote in the release.

Mainers were not alone in seeing gas prices soar overnight. In Ohio per-gallon costs shot up more than 50 cents and in Georgia they jumped 40 cents. In urban areas such as Milwaukee and Phoenix, some service stations temporarily were running out of fuel to sell.

On Wednesday morning, gas prices near Bangor Mall ballooned to around $2.86 for the lowest octane, as did prices at most gas stations along State Street. At the same time, however, prices at the gas station managed by MacDonald were as low as $2.609 per gallon, prompting customers to line up at the pumps to take advantage the relatively low price.

MacDonald said that on Wednesday morning he could afford to charge as much as 25 cents less per gallon than the nearest competitor because he was still selling gas he bought last week.

“The way it’s going now it will change tomorrow morning,” MacDonald said of his station’s prices. “It will be up there with the rest of them.”

By midafternoon, however, the lowest price for fuel at B-Gas already had been raised 10 cents to $2.709 per gallon.

Prices also increased 10 cents during the day Wednesday at A&B Convenience on Main Street in Bangor, where a gallon of low-octane Mobil gas rose from $2.699 to $2.799 shortly before noon. At Dysart’s Truck Stop in Hermon, per-gallon prices were raised 9 cents late Wednesday afternoon to $2.899, $2.999 and $3.099.

In Aroostook County, some stations were selling their cheapest gasoline Wednesday for $2.999 a gallon and their high-octane fuel for $3.299. Some dealers in The County said they wanted to raise their low-octane prices higher but were too apprehensive about breaking the $3 mark.

“When it’s broken, people may see a quick jump to around $3.20 per gallon,” said Madawaska retailer Tim Lausier.

Clint Duval of Duval Auto Service in Belfast on Wednesday was getting $2.95 per gallon. He said his supplier raised the price 25 cents the day before at noon, upped it another 31 cents at 7 a.m. Wednesday and again by 17 cents right after noon. Other retailers in eastern Maine said their wholesale suppliers on Tuesday had raised the per-gallon price more than 50 cents.

“I don’t see any end in it, I really don’t,” said Duval. “It’s going to be a long winter.”

Ron Benjamin, owner of variety stores in Belfast and Morrill, said Wednesday that instances of people driving off without paying for fuel have gone up along with the price.

“I get stolen $60 to $70 a day,” he said. “This is not good. I’ll probably get shot if prices keep going up.”

Last month, gas prices in the Bangor region were around $2.30 per gallon. One year ago prices for the same area were less than $2 per gallon, according to AAA’s online Daily Fuel Gauge Report.

Matt McKenzie of AAA Northern New England on Wednesday predicted that prices are likely to hit between $3.70 and $3.80 by the end of September. At that price, frugal motorists could be prompted to begin carpooling, cutting back on errands and maybe even scaling back autumn leaf-peeping trips, he said.

Py said gasoline dealers sometimes raise their prices in anticipation of what they will have to pay for their next delivery. He said profit margins for gasoline retailers have always been tight, with around 93 percent of pump prices being determined before the gasoline is delivered to individual stations.

“[Retail dealers] are going to price [it] at what they’re going to have to pay for it,” Py said. “They’re not happy about it either.”

Beth Nagusky, director of the Maine Office of Energy Independence and Security, said Wednesday that the decision Tuesday by President Bush to release some of the nation’s crude oil reserves likely will not have an immediate impact on gas prices. The crude oil still has to be refined into gasoline, she said, and it is the limited refining capacity caused by Katrina that has led to the sudden price surges.

“You can’t put crude oil in your gas tank,” Nagusky said. “As long as refining capacity is constrained, it won’t help in the short term.”

As gas prices have escalated, several county sheriffs in Maine have said their 2005 fuel costs will far exceed the amount of money they planned to spend.

“Our budget was whacked as of August 31,” Piscataquis County Sheriff John Goggin said Wednesday of his department, noting there was still four months in the year. “As of today we’re running on a deficit situation for our gasoline budget.”

Despite the shortage of gasoline funds, Goggin said his department would continue to answer complaints.

“We’re not going to do a lot different than we have been,” he said. “People expect a certain amount of public safety services and we’re going to provide that.”

Diesel fuel price increases were not far behind those of gasoline on Wednesday. Sonny Howe, a tractor-trailer driver from New Limerick, said Wednesday he paid $2.649 per gallon the previous day at Dysart’s to fill up his truck’s 200-gallon tank. On Wednesday, he paid 15 cents more per gallon at the same truck stop to “top off” his tank with 60 gallons of diesel fuel.

“It’s killing us,” he said of the price hike.

Howe, an independent operator, said he wouldn’t be surprised to pay more than $3 per gallon for diesel fuel on his way back home from delivering a load of french fries to Massachusetts.

“That’s $600 to fill that [tank],” he said. “That doesn’t leave much out of $1,000.”

One thousand dollars is what he is being paid to deliver his shipment of fries, he said.

“What can you do?” Howe said. “I can’t take [the truck] back to the bank because the bank doesn’t want it. The only thing I can do is keep plugging away.”

The Associated Press and BDN reporters Beurmond Banville, Diana Bowley, Walter Griffin, Doug Kesseli and Leanne M. Robicheau contributed to this report.