No Dip Seen for ’06 Gas Prices
Time to put away the party hats: Not only are the New Year’s celebrations done, the cheapest gasoline prices in months may be gone as well.
California’s average pump price leaped 11.5 cents in the last week to $2.328 a gallon for self-serve regular, a steep increase that puts an end to 13 straight weeks of decline, the Energy Department said in a weekly report released Monday. Nationwide, gasoline prices rose nearly 9 cents a gallon over the week to an average of $2.327 a gallon on Monday, according to the price survey.
Retail prices usually hit bottom in late December through mid-January, suggesting that 2006 could be the first time the California and national average pump prices stayed above the $2 mark for an entire year. California’s per-gallon average dipped below $2 in the first four weeks of 2005, while the nationwide average stayed under $2 until early March, the Energy Department said.
“It’s a pretty grim outlook,” said Charles Langley, a gasoline analyst at the Utility Consumers’ Action Network in San Diego. “Looking at the price of oil, we’re very concerned that we’ve already seen the lowest price that we’ll see this year.”
In futures trading Monday, the U.S. benchmark oil for February delivery fell 71 cents to $63.50 a barrel on the New York Mercantile Exchange. The cost of crude is up 13% from mid-November’s low of $56.14 a barrel. Wholesale gasoline traded down nearly 5 cents Monday to $1.768 a gallon on the Nymex.
In recent weeks, energy experts have predicted an early upturn in gasoline prices this year. They cite higher oil prices and a heavier-than-normal slate of refinery maintenance projects, some of which were postponed to ease tight supplies after hurricanes Katrina and Rita knocked a cluster of refineries offline in August and September.
In California, gasoline production fell by 7% in the last week of 2005, according to a survey released late last week by the state Energy Commission. Gasoline supply in storage Dec. 30 rose compared with the previous week, but was 9.3% below year-earlier levels, the survey said.
Refiners generally do not publicly discuss their maintenance plans and only one of the state’s 14 gasoline-producing refineries is known to be producing less gasoline. Valero Energy Corp. spokeswoman Mary Rose Brown said a planned project at its Wilmington refinery has reduced the plant’s normal output by 15,000 barrels, or 630,000 gallons, a day -- not considered a major hit during a relatively low-demand period.
Carol Thorp, a spokeswoman for the Automobile Club of Southern California, last week warned that “motorists can expect to see sharp increases in the next week” in gasoline prices. Thorp attributed the expected surge to futures speculators buying into a market they believe will rise.
Andre van der Valk, who runs two Shell stations in the San Fernando Valley, said the oil company had increased his wholesale price of gasoline by almost 20 cents a gallon in less than a week. He said increases of that magnitude wouldn’t normally hit until February or March, when California refineries convert production to the state’s summer-time gasoline formulas.
“I don’t see any reason for it,” said van der Valk, who also owns a Texaco and an independent station. “There’s no hiccup in the system. There’s no shortage of product.”
Shell Oil spokesman Shawn Frederick said he couldn’t reach company pricing experts late Monday to explain van der Valk’s price increases. But he said: “Since the middle of December, both crude oil and gasoline prices have risen significantly, and that has affected consumers not just in California, but across the U.S.”
