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Gas and Oil Prices Still Rising

Memorial Day travelers will find higher pump prices

By Mark Huffman
ConsumerAffairs.com

May 22, 2009

Motorists hitting the road for the Memorial Day weekend will face higher gasoline prices, though not nearly as high as last year.

The national average price of self-serve regular is $2.39 a gallon, up a dime from last Friday and 33 cents higher than a month ago. Last year, however, motorists were paying an average $3.83 a gallon.

The highest average price today is in Alaska, at $2.71 a gallon. In California, the average is $2.62 and in New York it’s $2.53. The cheapest average is in Arizona, at $2.20 a gallon.

One reason gas prices have been rising of late is the nation’s large stockpile of fuel, accumulated over the winter, has shrunk over the last few weeks. The U.S. Energy Information Administration says the U.S. crude oil inventory fell again last week and gasoline supplies dropped more than expected.

The amount of oil on hand fell by more than two million barrels to 368.5 million barrels for the week ending May 15. Gas supplies fell by 4.3 million barrels, to 204 million barrels. The decline was nearly four times what was forecast.

The shortfall can only be described as planned. Last year, when gas prices hovered near $4 a gallon, refineries operated at around 95 percent capacity, or greater.

Since the beginning of the year, refinery capacity has been around 80 percent, as gasoline suppliers have made a conscious effort not to flood the market. Even last week, as supplies fell for a second week, refinery output actually declined by nearly two percent, to 81.8 percent of capacity, according to the EIA.

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