Gas Prices at 8-Year High

New taxes and the Middle East military crisis have caused gasoline prices to jump slightly more than 10 cents per gallon nationwide since mid-July to their highest levels since late 1982, according to the Lundberg Survey.

The Burbank-based survey, which tracks gas prices at 13,000 stations throughout the country, noted that the average retail price of a gallon of gas was $1.27 last Friday, compared to $1.17 three weeks earlier. A year ago, the comparable price was $1.11.

Although consumer groups have complained that oil companies have used the Middle East crisis to raise pump prices, Trilby Lundberg said her survey did not support that.

Lundberg said the dime-per-gallon increase was due to tax increases--including the 5-cent-per-gallon transportation improvement tax that took effect Aug. 1 in California--historically high summer demand and increasing reliance on imported refined gasoline, whose price jumped immediately when Iraq invaded Kuwait this month. In fact, Lundberg argued, gas retailers have lost nearly a cent of profit margin since the invasion.

Lundberg said that when Iraq took over Kuwait on Aug. 2, the price of oil and all petroleum products leaped dramatically on the “spot market,” the place where oil companies and refiners purchase supplies at prices that fluctuate daily, if not more often.

Although oil companies have contractual purchase agreements in place for the vast majority of their supplies, Lundberg said that because they do not have sufficient refining capacity of their own, they are increasingly relying on spot market purchases of refined gasoline to meet increased summer demand from vacationing motorists. Further, spot market prices are often used as a benchmark for setting other prices.

She said the spot gasoline market saw slight price declines at the end of last week and, if that trend continues, consumers may see a dip in pump prices again.