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Price at Pump Could Hit $2.50 Per Unleaded Gallon By Weekend

Posted on: Friday, 8 July 2005, 21:00 CDT

Jul. 8--Blasting off from the stratosphere into high orbit, gas prices at some Milwaukee pumps suddenly jumped 20 cents Thursday, exasperating metro-area commuters who have been left wondering when their wallets will hit empty.

The average price of a gallon of regular unleaded gas was $2.41 in the metro area, according to a Journal Sentinel survey Thursday afternoon. Thursday morning, the average was $2.36.

Industry analysts blamed tropical storms churning across the Gulf of Mexico for most of the increase, which drove crude oil prices to a record $62.10 per barrel Wednesday.

As a result, gas prices at many metro area stations rose throughout the day Thursday. Higher prices might hit some stations faster than others, depending how much fuel they have in reserve, but analysts said most stations will raise their prices to around $2.50 by the weekend.

"We're going to be looking at generally high prices for the foreseeable future," said Michael Bie, spokesman for AAA Wisconsin. "The weather just makes things worse."

Gas prices already have been lurking at record highs as demand from China and India stretches worldwide supplies thin, but tropical storm Cindy helped drive crude oil prices even higher Wednesday as it knocked out power to refineries and interrupted supply lines along the Gulf Coast.

On its tail is Hurricane Dennis, which stands to menace the home base of U.S. refining and importing more than Cindy has, said Bernie Nowicki, a director of the Petroleum Marketers Association of America and a vice president of Quality State Oil in Sheboygan.

For now, commuters concerned about empty wallets should keep their eye on the weather, Nowicki said. If the Gulf Coast storms subside, he said, the gas prices should quickly follow suit, bringing them back to the same $2.30 range drivers have been griping about since late June.

If the storms continue, on the other hand, consumers and retailers could be in for a long, expensive summer. Retailers are currently eating some of the price increase with the hope that the high prices quickly subside, Nowicki said. If they don't, the prices could creep up as retailers become unable to foot the extra cost.

"Don't blame the retailers. Blame demand and the weather," he said.

In a tight market strained by increasing demand, any sudden event -- the storms, terrorist attacks and political decisions by oil-exporting countries, to name a few -- can play havoc on the price of gas, according to analysts.

After Thursday's bombings in London, the price of crude oil actually fell from its record high amid concerns of lower travel demand and economic slowdown.

However, oil prices will probably not remain low enough to strongly influence gas prices, said Bie, the AAA spokesman. Oil demand fell sharply after the Sept. 11 attacks as fewer people traveled and traders feared a recession, but Bie said he thinks the London attacks will not have such a dramatic impact on the market.

At the Mobil station on N. Downer Ave. and E. Capitol Drive, staff could see the impact immediately. During the afternoon rush hour Thursday, only a handful of cars showed up during a half-hour span -- lighter business than usual, manager Debi Schnake said.

"When we put the new numbers up, I was worried I'd hear screeching tires and car accidents," she said. "I kept thinking 'Am I going to get shot putting these up?' "

It might be hard to believe, but the average price of metro-area gas last June was $1.97, according to Journal Sentinel surveys. At the end of this June, the average was $2.35 -- the same price it was when gas stations were last surveyed on June 23.

GAS PRICES

$1.97 -- Average price of metro-area gas last June.

$2.35 -- Average price at the end of this June.

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Copyright (c) 2005, Milwaukee Journal Sentinel

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Source: The Milwaukee Journal Sentinel

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