Gasoline prices continue to rise
The pain at the pump intensified for the 11th week in a row, the Energy Department said Monday, with California’s average price for self-serve regular gasoline rising 5.3 cents to $3.305 a gallon and the U.S. average jumping 7.4 cents to $2.876 a gallon during the last week.
Refinery problems continued to get most of the blame from analysts for the fuel-cost increase.
Valero Energy Corp., for example, said it was restarting its 170,000-barrel-per-day McKee refinery in Sunray, Texas.
But the company said full capacity wouldn’t be regained until at least the end of the year.
The refinery in McKee supplies gasoline to Arizona. Its loss puts additional strains on that state’s other source of gasoline: refineries in the Los Angeles area.
The tight supplies have been a windfall for refinery operators, said Tom Kloza, chief oil analyst for Oil Price Information Service.
This year Southern California refinery operators have earned on average $28.76 a barrel for gasoline -- that’s the difference between what they get for a barrel of gas and what they pay for a barrel of crude, Kloza said. That’s up from a margin of $16.25 a barrel during the same period last year, Kloza said, “and 2006 was hardly a soft year. Never underestimate the market’s capacity for excess.”
Analysts said the nation’s refineries were sagging under the strain of high demand.
“The refinery problems are not over. They are aging and being pushed to their limits. It’s like driving an old car. You keep pushing it and pushing it and it’s going to break down,” said Mike Fitzpatrick, vice president of energy risk management for Fimat USA Inc.
Gasoline prices began rising in late January, adding more than 81 cents a gallon in California and 71 cents a gallon nationwide since then.
At this time last year, California’s average price was 41 cents lower and the U.S. average was 9 cents lower.
Last week, the biggest gasoline price increase came in the Southeast, where the average rose 10.3 cents to $2.841 a gallon., followed by the Gulf Coast (8.8 cents), the East Coast (8.4 cents) and the Rockies (8.2 cents).
Some fuel experts see signs of relief, citing the fact that several refineries are scheduled to come back on line in the coming week. In addition, Energy Secretary Samuel Bodman said Friday that he was “relatively confident” that there would be adequate gas supplies this summer.
“We are in the peaking process,” Kloza said. “The chances are greater that prices will dip rather than rise.”
In New York futures trading, crude oil for May delivery slipped 2 cents to $63.61 a barrel after fears of continued preelection violence in Nigeria eased.
Phil McPherson, director of research at C.K. Cooper & Co. in Irvine, said he saw oil prices staying steady at least until the start of the hurricane season, barring serious violence in this weekend’s Nigerian presidential election.
Nigeria is one of the main sources of imported oil for the U.S.
“There is still a lot of excess supply out there. I think it will stay in the $60-to-$66-a-barrel range,” McPherson said.
