Retail gasoline prices flared to record highs nationwide and jumped more than 7 cents a gallon in California, the Energy Information Administration said in its weekly report Monday, as months of run-up in the price of crude oil are starting to hit consumers more dramatically at the pump.
Analysts blamed increased demand for gasoline and continued production restraints by the Organization of Petroleum Exporting Countries.
The U.S. average price of self-serve unleaded regular gasoline rose to a record $1.421 a gallon, up 1.5 cents in the last week, according to the EIA, the statistical arm of the U.S. Department of Energy. The EIA bases its gasoline prices on a weekly survey of 800 service stations.
In California, the average price for unleaded regular reached $1.518 a gallon, up 7.4 cents from the previous week.
The U.S. average pump price is 51 cents a gallon higher than this time last year and is the highest price since the EIA began keeping a weekly tally of gasoline prices during the Gulf War in 1990.
A year ago in California, unleaded regular hovered around $1.11 a gallon but subsequently soared to a mid-April peak of $1.624 a gallon after a fatal explosion and fire at the Tosco Corp. refinery in Northern California as well as mishaps at several other refineries.
Because the cleaner-burning gasoline required in California is produced by a relatively few refineries within the state, any problems at those locations immediately restrict production and increase prices.
This time, gasoline prices have been driven higher by crude oil prices, which have more than doubled in the last year because of OPEC production cuts, said Tom Glaviano, gasoline market analyst with the California Energy Commission.
Crude oil for April delivery settled at $30.13 a barrel on the New York Mercantile Exchange, close to Friday’s nine-year high of $30.83.
Gasoline prices have also reacted to low inventories and fears that routine refinery maintenance could signify unreported problems, Glaviano said, adding, “It’s a jittery market.”
Analyst Trilby Lundberg, whose independent Lundberg Survey of gasoline prices hit a record national average of $1.471 a gallon, including all grades and taxes, said San Francisco is now the most expensive city in nation for gasoline, bumping Honolulu from its usual spot.
In San Francisco, self-serve regular unleaded gasoline sold for an average of nearly $1.6194 a gallon, Lundberg said. Gasoline in the Greater Los Angeles area, which includes Orange, Riverside and San Bernardino counties, retailed for an average of $1.4099
OPEC, which will hold a meeting of ministers on March 27, has been sending conflicting signals on its future production intentions.
Some OPEC officials have said that the cartel is leaning toward increasing output by at least 1 million barrels a day starting April 1. But Ali Rodriguez, the oil minister of OPEC’s second-largest producer, Venezuela, said he did not expect the organization to increase output in the second half of this year, fearing a seasonal dip in demand. The 11 OPEC nations and non-cartel members Mexico and Norway have cut output by 4.3 million barrels a day, representing about 6% of global daily demand.
U.S. Energy Secretary Bill Richardson said Monday in an interview on CNN that he has made headway in persuading major U.S. oil suppliers that they need to produce more oil to lower prices and rebuild U.S. petroleum inventories.
“We’ve made a lot of progress as a result of the administration’s diplomatic initiative,” he said, referring to talks during the last week with his counterparts in Mexico, Kuwait, Saudi Arabia and Norway. Richardson will hold similar talks with Venezuela’s oil minister in London today.
Reuters was used in compiling this report.