Posted on 08/16/2003 7:46:19 AM PDT by Brian S
By NELSON ANTOSH Copyright 2003 Houston Chronicle
Gasoline prices across the nation could increase by as much as 10 cents a gallon by Labor Day as the power outage in the Northeast exacerbates already low inventories.
Even before the blackout disrupted operations at six refineries, nationwide inventories of gasoline were at an eight-month low, with two weeks of heavy demand remaining.
The U.S. Energy Information Administration warned at midweek that the nation could be in the midst of another late-summer price surge, similar to what happened in 2000 and 2001.
Though there have been no big refinery shutdowns lately to cripple output, there have been a series of smaller glitches, especially in California.
And imports of gasoline, mostly from Europe where taxes encourage the use of diesel fuel over gasoline, plunged during the most recent week.
"The refinery blips and the blackout pretty well assure that the second half of August will see increases, and the highest prices of summer," said Tom Kloza, publisher and chief oil economist for the Oil Price Information Service. He predicted gains of 5 to 10 cents a gallon, possibly more.
For Texans, these increases would add to statewide pump prices, which rose 3 cents this week and 2 cents the week before, according to AAA Texas. The average statewide price is now $1.49 a gallon, 17 cents higher than the same time a year ago.
Pump prices would be even higher if retailers would have passed along the wholesale increases that have occurred since the first day of summer, Kloza said. Wholesale increases average 47 cents per gallon in California and 18 to 26 cents through the rest of the nation.
By comparison, the retail price of gas has increased by 10 to 15 cents because station operators either didn't have the pricing power to pass it along, or sensed that price decreases were just around the corner.
Demand typically continues strong until Labor Day and then falls sharply after that, according to Kyle Cooper, energy futures analyst for Citigroup Global Markets in Houston.
He isn't as worried about tight supplies, on the theory that the week's shrunken imports were an aberration and that the refinery disruptions will be minimal.
"We shouldn't have any damage to the facilities, and by Monday everything should be basically back online," Cooper said.
But consumers might see a short-term price spike in about two weeks, before the driving season fizzles, the analyst predicted.
Some parts of the country are already "running on empty" and are likely to see allocations and or other supply restrictions later this month, according to Kloza. The gasoline-starved northern Arizona market is borrowing from Texas, New Mexico, California and Nevada, while Canada and the northeast are competing for the few cargoes out of Europe.
"With gasoline demand now running about 2 percent above last summer, it is very much touch-and-go for reliable supply through Labor Day," Kloza wrote in a report. The supply and price woes on the West Coast "have spread like a computer virus," he said.
Gasoline futures rose Friday in a volatile trading session on the New York Mercantile Exchange. The session was shortened due to power outages that prevented many people from getting to work.
The crude, gasoline and heating oil futures contracts traded for about two hours, instead of the usual 4 1/2-hour session. Several analysts warned against reading too much into the shortened trading. Trading hours at London's International Petroleum Exchange weren't affected.
September gasoline jumped 2.31 cents to 99.94 cents a gallon, while September heating oil was down 0.87 cent to 80.51 cents a gallon. Crude for September delivery slipped 4 cents to settle at $31.05 a barrel. September natural gas was off 4.3 cents to $4.848 per thousand cubic feet.
In London, October Brent crude futures lost 6 cents to $28.81 a barrel.
That was the first time I'd filled up in years!
All that Iraqi oil....and prices keep going up, up, up!!!
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