U.S. Gas Prices Increase 14% From March, a High for ’94 : Energy: Experts blame strike by Nigerian oil field workers. West Coast is expected to catch up soon.
Just as many drivers are heading for cooler ground, U.S. gasoline prices have hit their highest point of the year--thanks to a post-July surge that has driven pump prices nearly 14% above the March level.
The Los Angeles area hasn’t been hit as hard yet--experiencing a 12% hike in the same period--but industry experts expect West Coast prices to close the gap soon if both crude oil costs and summer driving demand remain high.
“The West Coast has been sluggish but could be expected to catch up if the crude oil prices are sustained and demand remains strong,” said Trilby Lundberg, publisher of the Los Angeles-based Lundberg Letter, which tracks petroleum and consumer trends. Lundberg does not expect the most recent surge, more than 3 cents a gallon since late July, to drive away customers.
“The stronger consumer economy is absorbing these few pennies without difficulty,” Lundberg said. “Prices are only about a nickel more than last year, and yet we’re consuming more gasoline than last year.”
For unleaded regular self-serve gasoline, the national average price bottomed out at $1.02 a gallon March 11, according to Lundberg. That rose to $1.17 in the latest Lundberg survey, taken Aug. 5.
In Los Angeles, the same gasoline rose from $1.09 in March to $1.22 in the latest survey.
Gasoline nationally is about 10 cents a gallon higher than during the same season last year, while Los Angeles prices are up less than 6 cents a gallon over last summer, said Lundberg, who tabulates prices from 10,000 service stations around the country.
Industry experts blame the current higher prices on several factors beyond the summer driving season.
Many see at least some upward push from a protracted strike by more than 200,000 Nigerian oil field workers that has boosted crude oil prices. By some estimates, Nigerian crude production--which made up almost 8% of U.S. crude imports earlier this year--has dropped by 25%.
“Gasoline is rising because of the partial disruption of Nigeria’s exports,” Nauman Barakat, vice president of futures trading at Merrill Lynch, told Reuters. “Nigerian crude is heavily in demand during the gasoline season.”
But West Coast refiners, which are not dependent on Nigerian crude, say prices are only now catching up with generally higher crude oil prices throughout the year. Crude oil has risen nearly $5 a barrel since March, to about $19 a barrel, on the New York Mercantile Exchange.
At the same time, a glut of gasoline on the West Coast kept retail prices low, squeezing refiners’ profit margins. To remedy that, and to revamp refineries for production of mandated cleaner-burning gasolines, refiners have recently cut back production, adding to the upward pressure on pump prices.
“There’s an element of truth to both” explanations, said William J. Sanderson, senior principal at the Long Beach office of Purvin & Gertz Inc., a refining consulting firm.
