2008 Woodie Awards
Pacific Northwest's gas prices on the rise
Western states experience higher fuel costs due to isolation
Judy McClintock, News Editor
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At the close of April last year, a regular gallon of gas hovered around $1.85 in Oregon.
12 months later, that same gallon of gas has peaked well over $2, and fluctuates around $2.50 and above throughout the state.
Oregon has one of the highest gas prices in the nation, according to AAA Oregon/Idaho. Oregon is the fifth highest behind the toppers of California, Nevada, Hawaii and Washington.
The Pacific Northwest is commonly known to have higher gas prices than the rest of the nation, due to its separation from major pipelines, according to Frank Holmes manger of the Northwest Association for Western States Petroleum Association (WSPA).
“The West Coast is an isolated market,” he said. “The rest of the country is very well integrated with pipelines and networks.”
In fact, according to the Oregon Department of Energy, Oregon imports 100 percent of its petroleum and unlike other Western states, does not have refineries or internal crude oil resources.
“We have no refineries,” said Diana Enright, Oregon Department of Energy Communications Director.
Oregon receives 90 percent of its refined petroleum products from four refineries in the Puget Sound area of Washington. More than 80 percent of the crude oil these refineries export to Oregon originates in the Alaska North Slope oil fields.
Another significant source of crude oil for the refineries comes from the Western Canada Sedimentary Basin. The remaining crude—less than five percent—comes from Mexico, Indonesia, continental U.S. or the Middle East.
While Oregon’s isolated location and lack of refineries contributes to higher gas prices, the most significant factor is the price of crude oil, according to Holmes.
“The biggest driver of prices anywhere is the prices of crude oil,” he said. “Right now, we are seeing record prices of crude oil on the world market.”
According to The Associated Press, “Strong global demand, concerns about limited excess production capacity and fears of unplanned supply disruptions have kept prices (of crude oil) high.”
“The market and the balance of supply and demand is the bottom line driving prices anywhere,” said Holmes.
In addition to fluctuation around the nation, gas prices vary within Oregon as well.
According to Holmes, rural areas are more likely to have higher gas prices than urban areas because of lower competition. “There are fewer service stations in rural areas competing for the business,” he said.
Urban areas have more competition, according to Holmes. “If you have a corner with four stations competing for that business at that intersection, the market tends to force the prices lower,” he said.
This is evident in Polk and Marion Counties. Monmouth and Independence (Polk County), a mere twenty miles from Salem (Marion County), continuously have higher gas prices than their state capitol neighbor.
In fact, according to OregonGasPrices.com, the Salem area is a location with some of the lowest gas prices in the state.
The Medford-Ashland metropolitan area and coastal towns are seeing the highest prices currently, according to AAA Oregon/Idaho.
As for the state as a whole, “Some market observers expect gasoline prices to remain above the $2 per gallon mark for at least the next several weeks,” the AAA Oregon/Idaho website said. “Whether prices will rise in late May, stay where they are today or fall below $2 is uncertain.”
Elliott Eki, AAA Oregon Public Affairs Director expects the gas prices to remain fairly stable where they are. “With Memorial Day still a month away,” he said, “I expect gas prices to remain fairly steady at best, and rise according to the demand for fuel.”
BREAKOUT:
Oregon Petroleum Profile
Total petroleum consumption: 7.7 million gallons per day (2001), ranked 33rd
Gasoline consumption: 4.2 million gallons per day (2001), ranked 30th
Distillate fuel consumption: 2.0 million gallons per day (2001), ranked 31st
Crude oil proved reserves: 0
Crude oil production: 0
Total producing oil wells: 0
Information provided by Energy Information Administration; www.eia.doe.gov