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$3 Gas Spreads to 7 States, D.C.

By Joe Benton
ConsumerAffairs.com

April 27, 2007
Three-dollar-a-gallon gasoline has spread to 7 states and the District of Columbia, prompting speculation of yet higher prices ahead as the giant oil companies allow their gasoline stockpiles to dwindle.

California consumers still suffer with the highest average gasoline prices at $3.37 but the average price has also breached the $3 mark in Connecticut, Hawaii, Nevada, New York, Oregon and Washington along with D.C.

The average price for a gallon of regular unleaded gasoline in Washington topped the all time record of $3.18 in Seattle, passing the record of $3.17 set May 29 last year.

A Bloomberg News report during the week suggesting prices could reach $4 a gallon drew a terse and angry response form AAA Mid-Atlantic. The travel association on Wednesday called the predictions "premature, at best, and misleading, at worst."

"Any attempt to accurately predict the price of gasoline at a specific point in time is an irresponsible endeavor because numerous variables influence gasoline prices," AAA Mid-Atlantic spokeswoman Ragina C. Averella said in the release.

The threat of another summer of record gasoline prices presumably has consumers worried, although so far the high prices have done little to curb consumption.

U.S. gasoline inventories are at a 20-year low. The latest statistics released from the U.S. Energy Information Administration, an arm of the Energy Department, show gasoline inventories this week at 194 million barrels. That is just under 21 days of national use. EIA described that number as "well below the lower end of the average range." During the same week last year, inventories stood at 208 million barrels.

Gasoline demand has risen by 2.2 percent so far this year, according to the weekly data from the government.

The average retail gasoline price in the country is up 30 cents to $2.90 per gallon for regular over the last month.

Mid-grade now sells for $3.08 and premium $3.19. One year ago regular gasoline sold for $2.92.

The most expensive gallon of regular gasoline is once again found in Needles, California at $3.89.

The cheapest gallon is on sale in High Point, North Carolina at $2.41.

Round-Up

Here is a look at some gasoline prices from around the country in the ConsumerAffairs.com Gas Price Round Up.

California: Gas prices are expected to remain higher in California than everywhere else throughout the summer. The month of April saw two weeks of penny-a-day price increases alternating with two weeks of prices leveling off, and the month is ending with pump prices barely budging during the past week, according to the Automobile Club of Southern California's Weekend Gas Watch.

The average price of self-serve regular gasoline in the Los Angeles-Long Beach area is $3.33, which is half a cent higher than last week, 16 cents higher than last month, and 16 cents higher than last year.

In San Diego, the price is $3.35, which is four-tenths of a cent above last week's price, 15 cents above last month, and 16 cents above last year.

On the Central Coast, the average price is $3.45, up 1.5 cents from last week, 19 cents above last month, and 20 cents higher than last year.

In the Inland Empire, the average price is $3.345, six-tenths of one cent above last week, 16 cents higher than last month, and 14 cents higher than last year.

"Typically, price increases slow to a crawl when they're about to peak and head downward," said Auto Club spokesperson Carol Thorp. "However, malfunctions at several refinery units over the past couple of weeks have caused some unexpected shutdowns, reducing gasoline inventories and possibly adding more volatility to the fuel markets."

The blend of gas that California uses also contributes to the high prices. In order to meet federal air quality standards, California uses a cleaner burning fuel called Reformulated Gas 3.

"It is the cleanest burning gasoline in the world," said Sean Comey, spokesperson for AAA of Northern California. "It protects our air quality, but that also means it's more expensive to make."

The problem is that fewer refineries can yield RFG 3 than other types of gasoline, leading to the expensive fuel prices at pumps.

California gas prices are nearly 60 cents higher than the Gulf Coast and nearly 50 cents higher than the national average.

Texas: Retail gasoline price trends were mixed across Texas this week after eleven straight weeks of increases, according to a weekly survey.

The weekly AAA Texas survey showed regular-grade gasoline prices remained essentially unchanged this week at $2.78 per gallon.

"Gas prices increased less than a penny in most areas of the state this week and two communities saw slight decreases," said AAA Texas spokeswoman Rose Rougeau. "We'll have to see if this represents a peak in spring gas price increases or only a pause. The market remains volatile with continued refinery mishaps and continued strong demand."

Regular-grade gas prices were highest in El Paso, where they rose 2 cents per gallon to $2.87. Corpus Christi still had the cheapest gas after a 1-cent increase to an average of $2.69 per gallon.

Maryland: The average price for self-serve regular gasoline is $2.88 in Maryland, 11 cents lower than this time last year.

The price increases are a result of record demand for gasoline, unexpected refinery outages, increases in crude oil prices and a reduction in the amount of gasoline produced as refineries are making more cleaner-burning blends, according to AAA Mid-Atlantic.

The highest average price recorded in Maryland was $3.27 in September 2005, just after Hurricane Katrina damaged Gulf Coast oil production.

Florida: Gasoline prices are approaching the $3-a-gallon mark they passed last summer and in 2005, when hurricanes ripped apart the Gulf Coast oil infrastructure.

U.S. refineries aren't producing enough gasoline to meet demand, which is driving up pump prices ahead of summer's peak driving season, and some fear $4-a-gallon gas looms.

The average price of regular gasoline was $2.95 a gallon in Miami and $2.88 a gallon in Fort Lauderdale, according to AAA. That's up 31 cents a gallon in Miami and 28 cents a gallon in Fort Lauderdale from a month ago.

No refinery has been built in the United States since 1976. As demand for gasoline grows here, Americans increasingly depend on foreign refiners to provide imported gasoline.

Washington: The average price for a gallon of regular unleaded gasoline in Washington -- the state, not the District of Columbia -- topped the all-time record this week.

The average cost as calculated by the AAA was $3.18, passing the record of $3.17 set last May 29.

Demand is driving the price increase, experts say. The oil supplies are fine, but U.S. refineries aren't producing enough gasoline.

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