Despite tight supply and steady demand, it would take a disaster along the lines of Hurricane Katrina to push pump prices that highWith gasoline prices surging in 2007, U.S. motorists have cast a nervous eye toward gas station signs. Headlines about the specter of $4-a-gallon gasoline bedevil commuters and vacation planners, and fears of an inflationary ripple effect linger. Many have worried that pump prices could surpass the record average of $3.06 a gallon in September, 2005, right after Hurricanes Rita and Katrina decimated the Gulf Coast.
Gasoline is now at a national average of $2.87 per gallon, about 33% higher than 11 weeks ago. On Apr. 25 the picture got no prettier: Crude oil jumped $1.26, to $65.84 a barrel, on government data showing a steep, 2.8-million-barrel drop in gasoline supplies.
The main culprit in the price surge is lack of supply. Refinery utilization—which measures how much capacity gasoline refineries are using—fell to 87.8% from 90.4% the week before. Refiners typically report production upswings in the spring as they finish routine maintenance before the summer driving season. But this year fires and power outages have marred production at many refineries. "There are unusual problems in the refinery business; everything that could have gone wrong went wrong," says Fadel Gheit, senior energy analyst for Oppenheimer & Co. in New York. "From BP to Valero to Exxon to ConocoPhillips, every company had an operating problem or shutdown this quarter."
Read More
