Why US pump prices are on the rise – once again
Some refineries face outages. Prices could rise to $3 a gallon by Memorial Day.
from the April 11, 2007 edition
Page 2 of 3
Higher cost is a spring occurrence
It's not unusual for gasoline prices to rise in the spring as refiners shift over to the summer grade of gasoline, which is more expensive to produce. The fact that it happens so regularly prompted the National Association of Convenience Stores (NACS) to issue a gasoline price kit, or explainer, on Feb. 2, Groundhog Day.
"It's like the movie: Every year, we have the same thing happen over and over again," says Jeff Lenard, an NACS spokesman.
But this year, as Mr. Lenard notes, the price rise since February – about 61 cents a gallon – has been the fastest since 2000.
Part of the run-up has been the fairly sharp rebound in crude-oil prices. The week of Jan. 15, they had dropped to $50.51 a barrel, but today, the price is about $64.59 a barrel. The increase has added 37 cents a gallon to the price at the pump.
"Crude rose when the Iranians were holding the British sailors," says Neil Gamson, an analyst at the Energy Information Administration.
The cold February and March didn't help either, as oil companies had to continue to produce home heating oil. "They may not have shifted over to produce gasoline as much," says Mr. Gamson.
In some parts of the country, gasoline shortages – that is, strains on supply that can send gas stations scrambling – are becoming an issue. The Tennessee Oil Marketers Association reports that gasoline shortages in the state are not unusual. "We're at the end of the pipeline," says Marylee Booth, executive director. "We don't get outages, but we do get shortages."
The Denver area has also seen shortages this spring, reports Roy Turner, executive director of the Colorado Petroleum Marketers and Convenience Store Association. The supply problems cropped up after a fire in February at Valero Energy's McKee Refinery in Sunray, Texas. The refinery normally processes about 170,000 barrels of oil per day, with a significant amount going to the Denver area.
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