ARE UTAH GASOLINE PRICES UNFAIRLY HIGH?

• Position: Brief Article

Thomas Brill and Bruce Ratzlaff, natural resource analysts for the Utah Office of Energy and Resource Planning

NO

Let's look behind the headlines. When we adjust for inflation, summer 2000 gasoline prices were low. During the early 1980s, the public was angry about high gas prices. Back then a gallon of gasoline reached $1.30, but in today's dollars that gallon would cost around $2.40. Therefore, gasoline in Utah is a good buy at $1.50.

Perhaps a summer 2000 gasoline price of $1.50 seems high when compared to the unrealistically low prices in 1998 and 1999 ($1 a gallon in Salt Lake City). A more fair comparison would be to inflation-adjusted prices over the past 30 years.

In addition, unusually low crude oil prices a couple of years back caused Uintah Basin oil producers to shut-in production and lay off oil field workers. A shut results in permanently lost production. If anything, oil prices that are too low provide the wrong incentives, encourage wasteful consumption, and cause difficulties for the domestic oil industry.

The United States relies more heavily on imported crude oil than it has at any time in the past. Although Utah doesn't consume much imported oil, its oil industry pays world market prices for crude. Thus, anytime world crude oil prices increase, so do Utah's.

Fortunately, Utah has been immune to major price spikes seen in other portions of the country. California consumers consistently face higher prices and paid over $2 a gallon last spring. Gasoline prices in Chicago and Milwaukee briefly reached $2.50 last summer. Prices in Europe, Japan and Canada, including taxes, are $3 to $5 per gallon, largely due to high taxes. There is no logical reason why gasoline should cost less than drinking water. If motorists had to fill their tanks with premium bottled water, the cost would be about $20 a gallon.

Gas Pains

Gerald Tedrow, Executive Director Western Petroleum Marketers Association

YES

Prices are too high. And while petroleum marketers don't like high prices either we understand them. As...