Archive for Thursday, September 8, 2005

No quick relief seen for high gas prices

September 8, 2005

Michael Frehe filled his daughter's car Friday at the De Soto J-Mart not knowing where the numbers flying by on the pump would stop.

"I don't even know how much it holds," he said. Eventually, the tank topped off with a little more than 10 gallons. With gas at $3.10 a gallon in the wake of Hurricane Katrina's devastation to Gulf Coast oil production facilities, the bill came to more than $30.

Frehe, who works as a firefighter in eastern Johnson County, said he had made one concession to the rising gas prices.

"I bought a little car to drive back and forth to work," he said.

At an adjoining pump, Angela Smith spent more than $50 filling her car and two gasoline containers for lawn work. Higher gas prices hadn't changed her family's lifestyle, but she had made changes aimed at getting more for her gas buck.

"I work and go to school," she said. "I can't change that.

"I try to be more efficient driving -- get everything we need when I go out instead of making several trips."

The oil market started stabilizing somewhat Friday after the most recent round of price increases brought on by last week's hurricane in the Gulf Coast, said Steve Simmons, president of Town and Country Oil Petroleum Marketing Inc. While the passing of the panic response should stabilize prices, the man who provides fuel to about 50 customers in the Kansas City metropolitan said he didn't look for greatly reduced prices until there was a thorough assessment of the damage done to the Gulf oil fields, refineries and tanker off-loading facilities.

"Those refineries provide about 25 percent of U.S. needs," Simmons said. "There was already a problem with production capacity and aging refineries before the storm.

"Any kind of glitch causes problems that send tremors through the whole industry."

Once electricity was restored, it would take several months to get the refineries back online and operating at full capacity, Simmons said. And that optimistically assumed no more problems with hurricanes this year."

Simmons blamed some of the pre-existing refinery capacity shortage on government regulation. An industry -- designed to produce five or six blends -- is now required to refine "30 to 35" reformulated blends designed for certain cities. That makes production more expensive and greatly increases the likelihood of spot shortages, Simmons said.

It was a shortage of another petroleum product that concerns De Soto city engineer Mike Brungardt as he consider road projects scheduled for De Soto this fall.

LRM of Lawrence, which was the winning bidder for the reconfiguring of the east-Y, overlay of Commerce Drive, improvements to Waverly Road and Rik-Mar, has asphalt prices locked in for those projects but could face shortages in supplies.

"I anticipate it will be a short-term problem," Brungardt said. "Things should calm down once the knee-jerk reaction calms down."

Asphalt work is scheduled soon at Mize Middle School, which is to open at 83rd Street and Mize Road in August 2007. Bids have been approved for the construction of that school and a new elementary school in Shawnee but there is concern about the supply of building materials with at least a temporary loss of New Orleans' port facilities and increased demand with the recovery.

Contractors with the district experienced shortages of plywood in the wake of the much-less destructive Hurricane Andrew and steel in the face of Chinese demand, district facilities director Denis Johnson said.

Just how Katrina will affect supplies of asphalt and other building materials will be addressed at a meeting with contractors this week, Johnson said.

"We're trying to be pro-active," he said. "We might order materials even through we don't need to until next year. It's all speculative at this time."

The De Soto USD 232 Board of Education decided last spring not to increase bus ridership fees, meaning the district is absorbing two subsequent rounds of fuel price increases.

That isn't all, said Jack Deyoe, district operations director. Natural gas prices were following crude oil prices even though supply was high. Futures prices for natural gas reached $11.78 per 1,000 cubic feet last week, exceeding record highs established during the cold snap of December 2000.

Natural gas amounts to a sixth of the district's energy bill and electricity accounts for the rest, Deyoe said. Westar Energy is requesting a 9 to 10 percent rate increase from the Kansas Corporation Commission, which would probably be approved and become effective in January, he said.

"If we hadn't gotten the extra money from the state, we would have been up a creek," Deyoe said.

Commenting has been disabled for this item.