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Gas Prices Head Up as Supplies Run Low

By Joe Benton
ConsumerAffairs.com

July 10, 2007

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Retail gasoline prices seemed to have turned up, in large part because supplies of refined gasoline stocks continue to run low, putting pressure on pump prices.

The lack of adequate refining capacity among U.S. oil companies is pushing mid-summer price back up and gas prices are expected to rise again this week, according to the latest price brief from AAA.

"A 10-month high in crude oil prices, a refinery outage in Kansas and continued low U.S. refinery output will place upward pressure on retail gasoline prices this week," said Randy Bly of the AAA Auto club South.

The failure to refine enough gasoline means crude oil stocks have been building and U.S. supplies, including the Strategic Petroleum Reserve, now total about 1.44 billion barrels. That is a nine-year high.

Crude oil prices are not helping prices at the pump. Crude has topped $70 per barrel for the last week, pushed higher by violence against oil workers in Nigeria and fears of tightening supplies worldwide.

Rising crude prices usually mean that consumers will pay more for gasoline and there are signs prices are already going up.

The national average price for gasoline peaked at $3.23 for a gallon of regular in May and then began to decline. Prices settled in just under $3 a gallon about July 1.

Now the national average has started to rise, up one penny overnight and standing at $2.97, according to the AAA auto club.

And as gas prices turn up, big oil is looking for more ways to maximize profits.

The country's third-largest oil company announced it will spend $15 billion through the end of 2008 buying its own stock back. ConocoPhillips plans to repurchase between $2 billion and $3 billion in stock during each of the third and fourth quarters.

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