Gas prices surge to near record levels

By James R. Healey
USA Today

Gasoline prices have rebounded almost to record levels, according to two major surveys yesterday, halting a slow retreat that began March 11.

The turnaround could mean that motorists will suffer steadily climbing prices all the way to $2-plus gasoline forecast late this summer.

It also suggests that prices could climb sooner and faster than foreseen.

"We usually don't expect a peak until April, when Midwest and East Coast refiners shift in earnest to summer-blend gas," AAA spokes-man Geoff Sundstrom said.

It is costlier to blend gasoline that resists pollution-causing evaporation in hot weather. Lost production during the switch to summer gas can cause shortages that also drive up prices.

A weekly survey of nationwide gas prices by the U.S. Energy Information Administration showed that the U.S. average was $1.743 yesterday for a gallon of unleaded regular. That's up 1.9 cents from last week and 0.4 of a cent less than the EIA-reported record $1.747 last Aug. 25.

AAA's daily tally of prices at more than 60,000 gas stations showed the U.S. average yesterday at $1.731, up 0.2 of a cent from the Friday report and 0.6 of a cent less than its record $1.737 Aug. 30.

California continued to lead the nation yesterday with regular gas priced at $2.147 on average per gallon. Hawai'i was not far behind at $2.113 per gallon, according to AAA.

Sundstrom said AAA's national average could hit a record today when it rolls in weekend data. But "there's no way to know" immediately if that is a momentary spike or a harbinger of a continued climb, he cautioned.

EIA administrator Guy Caruso forecast record demand for gasoline this year at a time of unexpectedly low inventories. "We are really concerned about the inventory picture," Caruso told a meeting of petroleum refiners in San Antonio yesterday, Reuters news service reported.

EIA has forecast a record $1.67 per gallon as a full-year average for regular unleaded gas this year and has said that April and May monthly averages will zoom to $1.83.

Gas prices rose everywhere but on the West Coast, where they've fallen since setting records earlier this month, according to the EIA. The biggest jump is in the Midwest, where the regional average rose 3.6 cents from last week, to $1.683.

The West Coast largely has completed the transition to summer gas because rules there require it sooner than in other parts of the country.

Even as record gas prices began to seem imminent, the mercurial petroleum market began sending counter signals.

• Crude oil prices, which account for 48 percent of the price of gasoline, began to drop from last week's peak as oil cartel OPEC seemed to waffle on its commitment to cut production beginning April 1. OPEC ministers are scheduled to meet March 31 to discuss cuts.

  A barrel of West Texas Intermediate, also called light, sweet crude, for delivery next month was $37.11 at the close of New York trading yesterday. That was down 97 cents for the day and $1.07 less than last week's $38.18, which was the highest price since October 1990, following Iraq's invasion of Kuwait.

• Wholesale gasoline, which doesn't necessarily move in lockstep with oil, was $1.13 a gallon yesterday, down 2.55 cents.

  Wholesale gas prices remain high enough, however, to draw supplies from overseas that aren't available when prices are lower. That makes shortages less likely.