- The Washington Times - Tuesday, May 1, 2007

Gas prices are likely to set records this summer but probably won’t reach $4 per gallon, energy analysts said yesterday.

“The average gasoline pump price in the U.S. is likely to rise to a record this summer because of refinery disruptions and the high cost of crude oil,” Energy Secretary Samuel W. Bodman told reporters yesterday.

“I’m very concerned about this,” said Mr. Bodman, adding that gas prices could top the post-Hurricane Katrina record of $3.067.

The average price for regular unleaded gasoline in the D.C. area rose 7 cents last week to $2.97 according to AAA, the nation’s largest motorist organization, but prices at many gas stations in the region have already blown past the $3 mark.

A gallon of regular gas cost $3.49 yesterday at the Watergate Exxon on Virginia Avenue Northwest, the highest price in the region, according to www.gasbuddy.com. A gallon of gas cost $3.29 at the Wildwood Manor Exxon in Bethesda and $3.16 at the Langley Exxon in McLean.

“The good news is we’re not paying as much as we were last year,” said John Townsend, a spokesman for AAA Mid-Atlantic.

A year ago, Washington area motorists paid an average $3.03 a gallon for a gallon of regular.

“The bad news is this is the 12th week that prices have increased,” said Mr. Townsend. “We’ve been spending more over a protracted period of time.”

Memorial Day weekend marks the traditional beginning of the summer driving season, so the fact that prices are escalating so early does not bode well for consumers, Mr. Townsend said.

“But will it reach $4 a gallon? I’m crossing my fingers, no,” said Mr. Townsend. “I don’t think the economy can stand it.”

Other analysts agree.

Doug MacIntyre, an analyst with the Energy Information Administration (EIA), said he doesn’t believe consumers will see $4 gas this summer.

“Assuming that there are no more refinery problems, gas prices could go down as early as June,” he said.

Mr. MacIntyre said production problems at U.S. oil refineries were partly to blame for escalating prices.

“In the past few months there have been a number of refinery outages and refinery maintenance [issues],” said Mr. MacIntyre. “As a result we have drawn down our inventories, which are at their lowest for this time of the year since 1991.”

U.S. gasoline stocks totaled 205.1 million barrels as of April 1, down 4.4 million barrels from last year’s level, according to an EIA report.

“The other part of it is higher crude oil prices,” Mr. MacIntyre said.

Prices for light sweet crude oil have remained above $60 per barrel for the past two months, reaching a high of $66.46 Friday. Crude oil for June delivery fell $1.31, or 2 percent, to settle at $64.40 a barrel yesterday on the New York Mercantile Exchange.

“I wouldn’t say that refineries are to blame,” said Tancred Lidderdale, another EIA analyst. “But there have been unexpected outages to refineries due to fire and maintenance.”

Exxon Mobil Corp. yesterday said it shut down part of its refinery in Torrance, Calif., for “planned maintenance.”

Exxon Mobil also shut down a unit at its refinery in Beaumont, Texas, on Friday because of “hydrocarbon carryover into a sewer.”

Last week, lightning struck an 8,000-barrel storage tank and the resulting fire spread to another tank at a refinery in Wynnewood, Okla., operated by Gary-Williams Energy Corp. of Denver.

Those three refineries together can refine more than half a million barrels of oil per day.

“Problems at refineries are not unusual,” said Mr. Lidderdale of the EIA. “They are processing hydrocarbons at high pressures and temperatures. But [these problems bunched up] this April.”

Moreover, the refinery problems are occurring while demand for gasoline is at a two-year high, according to a report from the American Petroleum Institute (API).

“There has been a substantial increase in demand for gasoline from January to now — nearly 1.7 percent,” said Ron Planting, an API economist. “That’s stronger than the previous two years when demand increased at a rate less than 1 percent.”

Despite high prices, demand for gas is likely to increase as the summer driving season approaches.

“People drive more in the summer because there is more daylight and the weather is better,” Mr. Planting said.

This article was based in part on wire service reports.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide