Gas May Hit $3 a Gallon in Summer
Gasoline prices could jump to $2 a gallon in some cities over the next two weeks and might climb higher and faster than the government's predictions once the summer driving season starts, according to an April 11 USA Today story by Fred Bayles. "If all the ifs go bad at once, we're looking at close to $3 a gallon for gasoline in some places. If things don't go so bad, it will be closer to $2," said Mike Fitzpatrick, an analyst with Fimat USA, a New York commodities brokerage firm. On April 6, the U.S. Department of Energy (DOE) predicted that summer gasoline prices would average $1.49 a gallon for regular unleaded. But according to a nationwide poll of 8,000 service stations by the Lundberg Survey of Camarillo, Calif., prices have jumped 7 cents in the past two weeks alone. Gas cost an average of $1.51 a gallon over the weekend. Last summer's national average was $1.53 a gallon. The increases will continue. Wholesale gasoline prices, soon to be passed on to consumers, have reached record levels in the Northeast and Gulf Coast. The escalation is based on several factors, according to USA Today: * Low supplies. Since January, gasoline supplies have been running 10 million to 12 million barrels lower than last year. Consumption has been higher than usual, drawing down stocks of gasoline. * Low production. Many of the nation's refineries had to shut down for long-delayed maintenance and retooling to make summer blends of gasoline. Until this week, gasoline production was running 700,000 barrels a day less than last year. Though figures released April 10 by the American Petroleum Institute showed an increase, production for the year is still down 12 million barrels compared with the same period in 2000. * Short supplies of so-called "boutique blends" of gasoline formulated to meet different anti-pollution standards for various regions of the country. Many of these blends use methyl tertiary butyl ether (MTBE), an additive made from natural gas. With natural gas selling at record highs, less was used to make MTBE. This created shortages that could mean problems for motorists in Boston, New York, Louisville, Dallas, Houston and Washington. Even if production of summer gasoline catches up to last year's levels, prices will continue to rise, according to Tom Kloza, publisher of Oil Price Information Service, a firm based in Lakewood, N.J., that provides data to the petroleum industry. Kloza predicts record retail prices at the pump before May. When the summer driving seasons starts after Memorial Day, prices will vary depending on weather, crude oil supplies and refinery production. John Felmy, chief economist at the American Petroleum Institute, says anything from a hot spell to a blackout affecting a refinery could mean higher prices.
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