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Caution: Record Gas Prices Ahead

By Joe Benton
ConsumerAffairs.com

May 2, 2007
Gasoline prices could hit an all-time high by the end of May because of ongoing problems at the nation's oil refineries, according to the automobile club AAA.

Gas prices have gone up 30 cents a gallon since early April to an average of $2.98 bringing them within a nine cents of the record struck after Hurricane Katrina shut down refineries along the Gulf Coast in 2005.

"The nationwide average price of self-serve regular will probably hit $3 per gallon in the next few days, and could possibly set a new all-time record high price before the end of the month," AAA said.

Average gasoline prices are already at or above $3 a gallon in 13 states and the District of Columbia.

Gasoline stockpiles in the United States are down 15 percent since early February amid an unusually high number of refinery outages, alongside robust demand and low imports.

AAA said it was "alarming" that gasoline prices were rising so high without the backdrop of a major geopolitical or natural event to disrupt supply, like a hurricane or a new military flare-up in the Middle East.

"Because oil prices today are at least $10 less expensive per barrel than when gasoline prices previously exceeded $3 per gallon, almost all of the price pressure on gasoline can now be attributed to America's continuing -- and increasing -- inability to supply enough refined gasoline to the marketplace," AAA said.

Record High in Los Angeles

Gasoline prices in Los Angeles have already hit a record high with the average price of a gallon of regular self-serve unleaded reaching $3.42, according to the Automobile Club of Southern California.

The previous record high in Los Angeles was $3.40, set May 14, 2006.

"Typically, price increases slow to a crawl when they're about to peak and head downward," Auto Club spokeswoman Carol Thorp said last week. "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."

Some experts suggested that tight supplies, persistent demand from motorists and the upcoming heavy driving season have set the stage for prices going even higher.

The majority of U.S. consumers expect gasoline to reach $3.50 a gallon this summer and want action from the government on increased federal fuel-efficiency standards for cars and other vehicles, according to a new survey.

Price Pressure

Gasoline prices are shooting up ahead of the summer driving season and the survey conducted by Opinion Research Corp. found that most Americans feel they are suffering from price-gouging and will cut back on summer travel plans and general spending if prices climb to $3.50 per gallon or more.

The survey also found that an increasing number of Americans are considering a hybrid or other fuel-efficient vehicle.

The average price of a gallon of regular self-serve throughout the country is now $2.98. Mid-grade sells for $3.16 and premium $3.27.

The most expensive gallon of regular gasoline is on sale in Needles, California for $3.99. The least expensive gallon is on sale in Gillette, Wyoming for $2.63.

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