Pace of Gasoline Price Increases Starts to Slow
The explosion in gasoline prices quieted a bit in the last week, and crude oil dropped below $30 a barrel for the first time this month, offering motorists some hope that relief might be on the way.
In fact, many of those drivers are already banking on that relief, as a new analysis shows the sales of gas-guzzling trucks continue at a sizzling pace.
The average nationwide price of self-serve regular gasoline was nearly unchanged at $1.529 a gallon, up just two-tenths of a cent, the Energy Information Administration said Monday. This latest weekly increase, the 10th in a row, puts the average price 52 cents a gallon higher than a year ago, based on a weekly survey of 800 gas stations conducted by the EIA, the Energy Department’s statistical arm.
In California, the average price of self-serve regular gasoline jumped 5.4 cents to $1.793 a gallon. A year ago, California motorists were paying $1.229 a gallon for self-serve regular.
Both the U.S. and California numbers are nominal highs, but they still fall short of inflation-adjusted records set in 1981.
In any case, gas pump sticker shock has not yet translated into reduced sales of sport-utility vehicles, said Bob Schnorbus, director of economic analysis for J.D. Power & Associates, the Agoura Hills-based market research firm.
Year-over-year sales of full-size SUVs jumped 17% in January and February, outpacing overall vehicle sales, which rose 14% during the same period, according to J.D. Power statistics. Sales of luxury SUVs leaped 43% in January and February from a year earlier, even with gas prices having risen about 50% in 12 months.
The average price of premium gas in California is $1.988 a gallon, which means filling a 40-gallon SUV tank would cost $79.52.
“There’s no question that it’s getting expensive to operate these larger vehicles, but the impact on sales really isn’t showing up yet,” Schnorbus said. “One of the reasons is that the perception is prices will come down, maybe not soon, but at least by the end of summer.”
Whatever they’re driving, consumers will continue paying more at the pump for several more months.
That’s because inventories of gasoline are extremely low, which reduces the market’s cushion against adversity if problems develop at the nation’s refineries. California is particularly vulnerable because the pricey gasoline mandated by the state’s air-pollution regulations is produced primarily by refineries within the state.
The EIA has predicted that even if the Organization of Petroleum Exporting Countries agrees to increase production, as expected, at its meeting Monday in Vienna, the additional oil supplies won’t arrive in time to prevent even higher gasoline prices in the months ahead. The EIA has forecast that prices could reach a national average of $1.80 a gallon this summer, and even higher in California.
For the first time this month, crude oil closed below $30 a barrel, as benchmark West Texas intermediate for April delivery lost $1.48 to settle at $29.43 on the New York Mercantile Exchange. On March 7, crude futures set a nine-year high of $34.13 a barrel.
Spot gasoline prices in California have also dropped sharply in the last week as the state’s refineries have increased production and market speculation about shortages has eased, said Suzanne Garfield, a spokeswoman for the California Energy Commission.
California refineries have increased production of the state’s cleaner-burning gasoline to about 970,000 barrels a day, up about 11% from a year ago, Garfield said. In recent weeks, the state’s refineries were turning out only about 850,000 to 860,000 barrels a day because of routine maintenance and some equipment problems.
“If the refineries can continue to produce at these rates, we’re looking in better shape . . . but it’s always a touchy situation,” Garfield said, noting that refinery problems develop without warning, as happened last year with a fatal explosion at the Tosco Corp. refinery and a fire at the Chevron Corp. refinery, both in Northern California.
Although the price of gasoline may be stabilizing for the moment, Garfield said, increasing demand in spring and summer will probably keep prices high.
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Pumped-Up Costs
As gasoline prices increase, the cost per mile may increase only a few cents for vehicle owners, but over a year those pennies add up. A look at fuel costs at 15,000 miles per year for vehicles with four-speed automatic transmissions, except as noted:
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Cost/mile Cost/mile Annual cost Annual cost Vehicle at $1.70/gal at $2/gal at $1.70/gal at $2/gal Ford Expedition $0.111 $0.131 $1,672.13 $1,967.21 (full-size sport-utility)
Ford F-150 0.101 0.119 1,517.86 1,785.71 (full-size truck)
Chevrolet Blazer 0.093 0.110 1,397.26 1,643.84 (compact sport-utility)
Chevrolet S-10 0.088 0.104 1,324.68 1,558.44 (compact truck)
Mercury Grand Marquis 0.084 0.099 1,265.51 1,488.83 (full-size)
Dodge Caravan 0.077 0.090 1,151.24 1,354.40 (minivan)
Ford Taurus 0.072 0.085 1,080.51 1,271.19 (mid-size)
Chevrolet Cavalier 0.064 0.075 958.65 1,127.82 (subcompact)
Toyota Corolla 0.054 0.063 806.96 949.37 (compact)
Honda Insight 0.026 0.031 392.01 461.18 (gas-electric hybrid, manual transmission)
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Source: Automobile Club of Southern California
Researched by NONA YATES/Los Angeles Times
