The big question, though, is whether gasoline prices will rise or fall once Holly Corp. and its partner, Sinclair Transportation Co., open the spigots on the proposed 430-mile pipeline and begin sending at least 62,000 barrels of gasoline, diesel and jet fuel a day into southwest Utah and southern Nevada.

"Our supply of gasoline [in Utah] is tight enough already without sending a whole bunch of our production down to Las Vegas," said John Hill, state director for the Utah Petroleum Marketers and Retailers Association. "Without any increase in supply, I'm afraid that prices will just go up."

Driving the speculation of what might happen to prices was the announcement Monday by Holly Corp., the operator of a crude oil refinery in Woods Cross, that it had struck a partnership agreement with Sinclair to build the new 12-inch pipeline that is expected to cost about $300 million.

The project primarily would provide the Las Vegas area with an alternative supply source for refined petroleum products, although there also will be a terminal built in Cedar City, where wholesalers would be able to pick up products for distribution to their retail customers in that fast-growing area of the state. Las Vegas gets most of its gasoline and diesel fuel from refineries in Southern California, generally at a premium price.

"Demand for gasoline in the Las Vegas market has been growing at a rate 2 percent to 3 percent higher than the national average," said Ann Kohler, an analyst at Caris & Co. in New York. "They need to get additional supplies from somewhere, and it makes sense that Holly would want to fill that demand."

Officials for Holly argue that rather than tightening the supply of gasoline and diesel fuel in Utah, the new pipeline would lead to increased production from Salt Lake City-area refineries as they expand to take advantage of the growing markets in southern Utah and Las Vegas.

The project also would give Utah refineries greater access to the Las Vegas market during the winter months, when demand for gasoline in northern Utah typically falls off because of colder weather, said David Blair, a senior vice president at Holly Energy Partners, which will operate the pipeline once it is up and running.

The Salt Lake refineries "finally will have a reason to begin pulling off theirs shelves their expansion plans that have been gathering dust," Blair said.

He also anticipates that refineries in Wyoming and Montana, which already ship part of their production of refined petroleum products into the Salt Lake Valley through the Pioneer Pipeline, will step up their production to meet the increased demand.

Dallas-based Holly Corp. through its Holly Energy Partners, began studying the idea of a pipeline from Salt Lake City to southern Nevada more than a year ago. As part of that research, the company approached other refinery owners to see if there would be enough demand for space in the pipeline to justify its construction.

Holly Energy spokesman M. Neale Hickerson said Monday the company anticipates that it will have all of the permits for the project, which will be known as the UNEV pipeline, by April 2008, after which construction will begin.

One possible route calls for the pipeline to run from Salt Lake City west to the Tooele area, where it would turn south toward Cedar City. "There are still a couple of routes that we're talking with the Bureau of Land Management about," he said.

With or without a pipeline, it is common for Utah-produced gasoline to flow into surrounding states, depending on the price differentials in the different market areas, said Rolayne Fairclough, spokeswoman for AAA Utah.

In times of high demand, Holly and the other Salt Lake-area refineries often load up gasoline into tanker trucks bound for southern Nevada. But that is a very expensive and inefficient way of moving refined petroleum products, Holly's Hickerson said. "A pipeline will be a lot better."

steve@sltrib.com