Tags: Gasoline | Prices | Head | Back

Gasoline Prices Head Back Up

Tuesday, 15 January 2002 12:00 AM

Retail prices were expected to begin rising for the remainder of the winter as the economic fundamentals of the market lead some refiners to ease up on production, and environmental regulations require the industry to prepare to shift production toward summer grades of reformulated gasoline.

"For the next several weeks, motorists can expect to see a pattern of a general trend toward higher prices coupled with occasional price declines," predicted Jeff Spring, a spokesman for AAA in Los Angeles.

The auto club said Tuesday that the nationwide average price for regular gasoline was $1.128 a gallon, compared to $1.092 last month and $1.477 a year ago.

The direction of price varied in different parts of the nation, AAA said, with prices going up two to five cents in the Midwest, Northeast, Southwest and Southeast while falling similar amounts in the Great Lakes region, West Coast and New England.

Winter is generally the time of year when drivers are content to stay off the road and gasoline demand dips to annual lows. This year, the global economic slump has helped keep a lid on crude prices despite OPEC's efforts to cut production.

At first glance, it would appear that crude's inability to stay above $20 a barrel, coupled with lighter winter demand, would keep gasoline prices in a huge slump. There are, however, signs of trouble ahead for motorists.

In its most recent forecast, the U.S. Energy Information Administration noted that gasoline supplies in the United States have remained at high levels in recent months and have kept prices low, which could make the coming transition from winter to summer-formula gasoline a shocking experience for many consumers.

Because the "crack spread," the difference in price between crude oil and wholesale gasoline, has narrowed a great deal in recent months, individual refiners may decide that a gasoline production cut was in order, which would theoretically raise gasoline prices while forcing the price of crude lower.

"Unless the economy erodes faster than previously projected, or world crude oil prices collapse, prices are expected to increase at the pump," the EIA said last week. "If our crude oil price path holds, and barring any major supply disruptions, we expect pump prices to gain about 20 cents per gallon by late spring from the $1.09 average observed in December 2001."

Spring is generally a time of substantial price hikes at the pump as the costlier summer gasoline mandated by the Clean Air Act reaches the retail level and the summer driving season gets under way. The pattern was seen Tuesday on the New York Mercantile Exchange, where gasoline for delivery in April was trading at around 10 cents a gallon above February delivery.

Tom Kloza, an analyst with Oil Price Information Service in New Jersey, said in a release Tuesday that an ominous trend for consumers was the flagging winter demand for gasoline that has been running about 1 million barrels a day below production levels. If the supply of winter blends builds up, refiners may have to slash prices to get rid of their inventory and then boost them by 30-40 cents when summer-formula gasoline sales begin.

"A surplus of winter spec gasoline makes the transition to the Clean Air blends all the more challenging," Kloza said.

Copyright 2002 by United Press International.

All rights reserved.

© 2019 Newsmax. All rights reserved.

   
1Like our page
2Share
Pre-2008
Retail prices were expected to begin rising for the remainder of the winter as the economic fundamentals of the market lead some refiners to ease up on production, and environmental regulations require the industry to prepare to shift production toward summer grades of...
Gasoline,Prices,Head,Back
552
2002-00-15
Tuesday, 15 January 2002 12:00 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved