Pump prices climb at more moderate pace
It wasn’t exactly relief for California motorists, but it might have felt like it.
The state’s average pump price rose by just a penny over the last week, the Energy Department said Monday, slowing a seven-week run in which the per-gallon fuel average vaulted from $2.49 to nearly $3.08.
The average price of a gallon of self-serve regular gasoline in California reached $3.078, according to the Energy Department’s weekly survey of gasoline stations. Last week’s 1-cent increase was a stark contrast to a 17.1-cent jump the week before and left the average price 44.3 cents a gallon higher than at this time last year.
The U.S. average rose 1.8 cents to $2.577 a gallon. That was 7.3 cents above the price during the same week in 2006.
The increases have been blamed on refinery problems combined with strong demand. Prices may begin to ease soon as refineries improve their production, fuel experts said.
New York futures trading sent mixed signals. The U.S. benchmark light sweet crude fell 52 cents to $56.59 a barrel Monday. But concerns about declining gasoline supplies sent gasoline futures up 5.1 cents to $1.958 a gallon, the highest level in almost seven months.
“The price rallies that took nationwide numbers above the $3 threshold in 2005 and 2006 were special and not likely to be repeated this year,” Tom Kloza, chief oil analyst for Oil Price Information Service, wrote Monday in his Speaking of Oil blog. Those special factors included Hurricane Katrina in 2005 and significant storm-related refinery maintenance in 2006.
But the tight balance between fuel supply and demand leaves drivers vulnerable to another price surge if something goes wrong. Some analysts talked about the extraordinary consumption of gasoline well before the start of the so-called peak driving season and the strains it was placing on the U.S. refinery system.
“It is seriously aging. It’s under tremendous duress to meet the demand, so more refinery glitches can be expected down the road. That is going to be the bottleneck,” said Mike Fitzpatrick, vice president of energy risk management for Fimat USA Inc in New York.
“We had 9 million barrels of demand for gasoline over the winter, an amount you expect to see in the summertime,” Fitzpatrick said.
In California, gasoline supplies are constantly razor thin because few refineries outside the state make its cleaner burning fuel.
“California has added a lot of demand, and it has not had a lot of capacity creep from adding on to existing refineries,” said Fred Rozell, director of retail pricing for Oil Price Information Service. “You are in a spot where there is just no room for error.”
