You Think Gas is Expensive Now? Just Wait...
By: Steve Sawyer | Source: Reuters
March 23, 2004 1:06PM EST
By Reuters
U.S. gasoline prices have reached an all-time high.
The American Automobile Association's daily survey reported today that the average price of a gallon of regular gasoline at the nation's pumps was $1.738, up less than a cent from the previous record hit last September.
The U.S. Energy Department's weekly survey of 800 stations found the average pump price on Monday 5.3 cents higher than a year ago and predicts they'll go a dime higher in April and May, even before peak driving season begins.
Drivers in California are suffering the most, with gasoline prices well above $2 a gallon for the past four weeks, although average prices in the state eased 1.4 cents to $2.083 a gallon last week.
Absolute prices may have reached a record, but in relative terms, they have a way to go. Prices in 1981 reached an inflation-adjusted $2.90 a gallon. Oil producer group OPEC, which controls roughly half of the world's exported crude, is mulling whether to further cut global supplies starting April 1, adding to a series of production cuts that have brought oil prices to nearly $40 a barrel.
Due in no small part to the highest oil prices in two decades, Exxon Mobil (XOM, news, msgs), ChevronTexaco (CVX, news, msgs) and ConocoPhillips (COP, news, msgs) all moved up smartly in Fortune magazine's annual ranking of America's largest companies, released Sunday.
Who's to blame?
Oil companies blame tight supplies and refining logistics, not greed. The country is importing less European gasoline, overall inventories are low and many metropolitan areas require their own, specially blended cleaner-burning fuel.
Lawmakers aren't convinced.
Democratic Sen. Ron Wyden of Oregon on Monday reintroduced a bill that would require the Federal Trade Commission to act on what he calls anti-competitive industry pricing policies.
"It's past time that government regulators opened their eyes to reality of rampant price manipulation by gas companies and protected drivers from getting pummeled at the pump,'' Wyden said.
The FTC earlier this month opened an informal probe into California retail gasoline prices -- the highest in the nation -- at the urging of Democratic Sen. Barbara Boxer of California.
Republican Sen. Chuck Grassley of Iowa said soaring gasoline prices are a good reason for the Senate to pass a stalled energy bill.
"This bill is too important to our American economy to let it die,'' Grassley said, pointing to provisions that would double the use of corn-blended ethanol as a gasoline additive. The bill also includes billions in tax incentives for oil drilling, coal-fired utilities and a natural gas pipeline.
Ingredients for a gas crisis
Prices are up nationwide because of strong fuel demand, low inventories and high crude oil costs, which account for almost half the price of gasoline.
Guy Caruso, EIA administrator, said at an oil industry meeting in San Antonio that he was "really concerned'' about the U.S. gasoline inventory that is about 13 million barrels lower than the agency had projected.
European gasoline imports have kept the U.S. market from sinking to critically low levels in the past, said Matt Simmons, chairman of Houston-based energy investment bank Simmons and Co. International.
But dwindling European gasoline imports could spell trouble for U.S. drivers during the peak summer driving season, Simmons said.
"We have really backed ourselves as a country into an unbelievable corner that I think ends up finally resulting in gas lines again,'' Simmons said, referring to the aftermath of the Arab oil embargo of the mid-1970s.
The retail price for cleaner-burning reformulated gasoline, sold in many metropolitan areas, rose 1 cent in the latest week to $1.838 a gallon, according to the EIA survey.
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