U.S. pump prices top $3 a gallon on supply trouble
The average U.S. gasoline price jumped above $3 a gallon Friday because of continuing refinery problems, a shortage of skilled workers to help fix them, high demand and low supplies.
The national average price for a gallon of self-serve regular gasoline hit $3.012, according to AAA’s daily survey of filling station credit card receipts.
It was the first time that the U.S. average has topped $3 since September. Analysts feared the price could go even higher if new problems added to the strain on the nation’s refineries, which have been hit by an unusual number of mishaps this year.
Gasoline supplies are unusually low for this time of year, “so we don’t have the cushion we normally have to alleviate shortages,” said Phil Flynn, vice president and senior market analyst for Alaron Trading Corp. in Chicago.
The rise in pump prices was sudden, with eight states joining the $3-and-above club since Monday. The 20 states, led by California with an average price of $3.455 a gallon, stretch across the nation.
The AAA average rose more than 30 cents over the last month but was still short of its record of $3.057 a gallon set Sept. 5, 2005.
The push past $3 a gallon by the U.S. gas average “should be an alarm bell going off in the offices of every member of Congress and each of the presidential candidates,” AAA said.
But relief will be hard to find. Three major refineries are operating at only 50% capacity, representing a loss of 300,000 barrels a day, said Fadel Gheit, senior energy analyst for Oppenheimer & Co.
Growing international thirst for gasoline, topped by China and India, also will drive up the price on U.S. fuel imports, he said. Gheit added that he was hearing about a shortage of skilled workers, especially welders, needed to repair damaged refineries.
Tom Kloza, chief oil analyst for Oil Price Information Service in New Jersey, said a consumer revolt might be necessary to help bring the price back down.
“You are going to see some demand destruction and then you are going to have to cross your fingers. It’s going to depend on whether those refineries get back in gear,” Kloza said.
The U.S. hasn’t added a new refinery in 30 years, and a development Friday helped illustrate why. A federal judge blocked construction of a 150,000-barrel-a-day refinery near Yuma, Ariz., because of an Indian tribe’s concerns over the potential destruction of cultural artifacts. Arizona Clean Fuels Yuma has been trying to build the facility since 1997.
