December 06, 2001 11:00 pm

By Ray Linker

Observer Staff Writer

Have the gas wars started in La Grande with the arrival of Safeway? Not everyone thinks so.

When the new Safeway opened Wednesday at 2111 Adams Ave. with a fuel pumping station, it had posted regular gas at $1.31. With a Safeway Club Card, customers could get a 3 cents per gallon discount.

The day before Safeways new store opened, the lowest prices for gas in La Grande was $1.35. It was $1.39 at some outlets.

Wednesday, at least two other service stations lowered their prices to $1.31. By today, four stations in town, including Safeway, had dropped to $1.29.

We dropped our price to $1.29 at the two Exxon stations, said Brian Waldrop of Waldrop Oil Co.

The price has been going down for several months, but I cant see it going too much lower. Its already gone down further than I thought it would, Waldrop said.

As far as the new Safeway pumps opening as competition, Waldrop said, We just view them as competition and well always be competitive.

Wes Kalmbach of Georges Texaco, on West Adams Avenue, said Safeways arrival in town is not the reason for the declining prices.

The price of gas has been going down all fall. Safeway didnt make the price drop. It would have gone down anyway, Kalmbach said.

His price this morning dropped from $1.34 to $1.29 for regular.

Right now, because the prices are going down so fast, Im selling premium at a loss.

The local price for regular has dropped below the state average of $1.33, which is still the highest in the continental United States, according to the American Automobile Association in Portland, which compiles weekly statistics.

The situation in the Middle East has a lot to do with local gas prices, said Elliott Eki of the Portland AAA office.

He said if tensions relax, analysts expect oil prices to drop again, However, if the violence continues, its likely that the prices will firm up and that gasoline prices at the pump will start to rise again.