Marketplace Report: Feeling the Pain at the Pump
ALEX CHADWICK, host:
Back now with DAY TO DAY. I'm Alex Chadwick.
Another new record for oil prices today. It's above $73.00 a barrel. Nationwide, average gasoline prices are now $2.85 a gallon. California's average is just above $3.00, and in the east, there are shortages of gasoline in some areas as refiners and distributors make the switch to summer blends of fuel. Joining us is John Dimsdale in Marketplace's Washington Bureau. John, what about these spot shortages of fuel?
Mr. JOHN DIMSDALE (Marketplace): Well, it sounds like it's going to be for several weeks. In part, it's still the hangover from last summer's storms, but it's also caused by the process of changing over to gasoline that is less polluting in the warm weather, and that procedure is more disruptive this year because distributors are switching from the old chemical called NTBE, which has been found to pollute ground water, to ethanol. Geoff Sundstrom, who tracks gas supplies for Triple-A, says the switch is hitting the mid-Atlantic states right now, from Richmond to Philadelphia.
Mr. GEOFF SUNDSTROM (Spokesman, Triple-A): What's occurring at the retail level and at the fuel distribution terminal is a complete draining of their gasoline inventory, the cleaning of all the equipment and storage, and then a refilling of that storage with the new Ethanol blend fuel.
Mr. DIMSDALE: Now, the good news here is that once this change is done, Ethanol is cheaper than NTBE and could take some of the price pressure off gasoline. The Triple-A expects prices to drop a bit after Memorial Day, but stay at least in the $2.50 range for the summer.
CHADWICK: Gas prices have been a high, John, since Hurricanes Katrina and Rita. It's going to be hurricane season again pretty soon. What kind of economic impact are these prices having? Do we know?
Mr. DIMSDALE: You know, so far, surprisingly little. In the past, these kinds of levels would spark real economic drag, high interest rates, even recession, but adjusted for inflation, gas prices aren't quite at the record highs reached during the oil embargos of the '70s, and, you know, there are signs that Americans are driving less and buying fewer gas-guzzlers.
CHADWICK: You know, there's also a political fallout from this, though, isn't there? This is an election year, and people worry about these prices.
Mr. DIMSDALE: Yeah, exactly. The polls show it's becoming an issue of concern for a lot of voters, and Democrats see an opening, and the gas bills are taking the edge off of Republican hopes that they could benefit from this strong economy.
Coming up later on Marketplace, our series, Conversations From the Corner Office, continues with an interview with the CEO of Xerox, Ann Mulcahy.
CHADWICK: Thank you. Thank you, John Dimsdale of public radio's daily business show, Marketplace, produced by American Public Media.
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