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 3 of 3
"A number of Valero stations have been out of product, and other refiners have tried to pick up and help out. But the supply has not kept up with demand," says Mr. Turner.
Valero hopes to restart the refinery by mid-April, according to Bill Day, communications manager for Valero.
There have also been several refinery incidents that can best be described as bizarre. "A month ago, a raccoon and a possum, separately, took out two electrical substations, and two refineries had to shut down," says Mr. Felmy. "They weren't out for long, but in California, any disruption causes problems. And because the state has its own blend of gasoline, there is very little you can get elsewhere."
Impact on gasoline demand
The higher prices may be starting to have some impact on consumer behavior. Last year, the rate of increase in demand for gasoline was one of the weakest in years, says Mark Routt, an energy analyst at Energy Security Analysis in Wakefield, Mass. That trend is continuing, he says.
With the price of crude oil off its highs, the price of gasoline will come down – eventually, says Mr. Routt. "The good news is that there has been less of a price rise at retail than would be suggested by the crude price rise," he says. "But the bad news is that as prices drop, it may take longer for them to come down at the retail level."
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