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Last Updated:  Friday, 21 February, 2003, 17:36 GMT
US anger at $2 gallon
US petrol station
US motorists feel the pinch
Angry US motorists have accused oil companies of exploiting the Iraq crisis to push up prices.

Forecourt prices have soared above $2 (1.24) a US gallon (about four-fifths of a UK gallon) in some areas, as the military build-up in the Gulf continues.

Friday's explosion at a New York oil and gas depot is likely to push prices even higher.

But American motorists are still paying nearly two thirds less for their fuel than their UK counterparts.

Profiteering?

US motorists are paying about 52 cents a litre, about 33p, while motorists in London are currently forking out about 79p a litre.

We feel that most of the increase has been due to fear and speculation
American Automobile Association
US drivers are used to seeing petrol prices rise in the spring, as refiners shift from winter to summer-grade fuel.

But it is the scale and speed of the increases that has led to discontent.

The average retail price of regular unleaded has gone up 56 cents since the start of the year, leading some to suspect profiteering.

Jose Quiles, a 20-year-old tanning salon manager from Dallas, who paid about $10 on Thursday for just over six gallons of Exxon petrol, told Associated Press: "This is ridiculous."

Suppliers blamed

Corina Alba, 22, said she saw some connection between petrol prices and the possibility of a war in Iraq, but she doubted it was the sole explanation.

"I think it's just an excuse to raise prices," said Miss Alba.

Truck driver Tommy Wimberly said he was paying about one-third more to fill up his truck than a month ago.

"I don't like the high prices, but I'm not angry," said Mr Wimberly, who expects prices to go even higher if the US goes to war with Iraq.

Petrol station owners have blamed their suppliers, who have been steadily increasing wholesale prices for weeks.

Investigation

The retailers suspect "zone pricing", where suppliers value their product based upon the highest level a particular market will bear, has led to the rapid increases.

Richard Loeber, a gas station owner from New Jersey said: "People know they're getting gouged, but believe me, it's not from the dealers."

The American Automobile Association has backed calls for an investigation.

AAA spokesman Jeff Sunstrom said: "We feel that most of the increase has been due to fear and speculation, rather than any change in the supply or demand for crude oil or gasoline."

Inflation risk

The petroleum industry has blamed higher crude oil prices for the price increases.

It points to oil traders' fears of supply disruptions in the event of a war in Iraq and the impact of the Venezuelan oil strike.

John Felmy, chief economist at the American Petroleum Institute, said: "The fundamental thing is that crude prices have gone up dramatically."

The escalating cost of petrol helped push US consumer prices up by 0.3% in January.

But the core measure of inflation, which excludes energy and food costs, showed consumer prices rose just 0.1%.





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SEE ALSO:
Oil prices push higher
18 Feb 03 |  Business
Record US trade deficit
20 Feb 03 |  Business


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