Expert Says Gas Will Soon Hit $3.40
By GEORGE HOHMANN
The price of gasoline is expected to climb another 20 cents a gallon by next month, the U.S. Department of Energy’s top forecaster said.
Prices could go even higher if the oil cartel formally known as the Organization of Petroleum Exporting Countries doesn’t increase production, Guy Caruso, who heads the department’s Energy Information Administration, told The Wall Street Journal.
The national average retail price for a gallon of regular gasoline is $3.10, up 34 cents from a month ago, according to AAA. But the average in West Virginia now is $3.17, which implies that if Caruso is right, Mountain State motorists could encounter nearly $3.40-a-gallon gas in a few weeks.
The average price in West Virginia was $2.82 a month ago and $2.28 a year ago.
Caruso predicted that the price of gasoline will continue to rise even if crude oil prices do not because the price of gas has not caught up with the recent run-up in crude. “We haven’t seen the full pass-through yet,” Caruso told USA Today.
The price of crude oil has increased by about $20 a barrel in the past two months.
Jan Vineyard, president of the West Virginia Oil Marketers and Grocers Association, said today, “For every dollar crude oil goes up, you see a two- to three-cent increase in gasoline prices. The reason is, crude makes up the largest portion of gasoline prices.
“You have other things coming into play – distribution and refining and all of that – but crude is the largest component in the price,” she said.
“People don’t have it in their budgets,” Vineyard said of the projected higher price. “So they should start conserving.
“This hurts retailers because people don’t come in and spend money inside our stores – buying coffee and other things we’ve invested in the stores – when the price of gas is up,” she said. “They spend that money at the pump. They only have so much to spend. Retailers would rather see low gasoline prices.”
Vineyard said the difference in the national average price of gasoline and the West Virginia average is mostly due to West Virginia’s high taxes.
USA Today said several factors are helping to keep gasoline prices from increasing in tandem with oil. Caruso told the newspaper that U.S. gasoline demand eases in the fall and winter, helping “mute the price increase.” Also, gasoline inventories in Europe are fairly high.
Caruso predicted that crude oil prices will remain high through the first three months of 2008. Supplies that come onto the market after that will be more expensive because of “dramatic increases in the cost of doing business” for oil companies, he told The Wall Street Journal.
The AAA, formerly the American Automobile Association, tracks gasoline prices with its Daily Fuel Gauge Report, which is posted online at www.fuelgaugereport.com.
Contact writer George Hohmann at business@dailymail.com or 348- 4836.
Originally published by DAILY MAIL BUSINESS EDITOR.
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