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06 Experts: Prices Will Rise Due to Crude-Oil Cost, Summer Shift

Posted on: Wednesday, 22 February 2006, 09:00 CST

By Craig D. Rose, The San Diego Union-Tribune

Feb. 22--Despite jittery world oil markets, U.S. motorists are getting a break at the pumps as gasoline prices continue to ease. But experts say the good news for consumers is unlikely to continue much longer, as higher oil prices and a shift to summer fuel blends should soon send gasoline prices back upward.

Over the past week, average San Diego-area prices for unleaded regular fell to $2.53 per gallon, down 3 cents from one week ago, according to a survey by the Utility Consumers' Action Network.

Experts say motorists are benefiting from a transitional period during which refiners need to clear out supplies of winter gasoline blends, which can't be sold after the end of the month.

Fuels are changed seasonally to minimize emissions.

"So we're in the twilight zone of gas pricing before the spring turnarounds," said Charles Langley, who oversees UCAN's gasoline monitoring project. "This time of the year, we usually see the lowest prices."

Still, prices remain substantially above the average of $2.27 per gallon the UCAN survey found as 2006 began. The survey recorded its highest prices of the year Jan. 28, at $2.61 a gallon.

UCAN's executive director, Michael Shames, said consumers remain captive to a gasoline market controlled by small number of oil companies earning huge profits.

"It's not a competitive market," Shames said.

San Diego-area motorists are also paying a substantial premium compared with drivers elsewhere in the nation.

According to the Energy Information Administration's latest survey, the average retail price for U.S. gasoline is $2.24 a gallon, down about 2 cents over the past week. But prices are still 34 cents higher than a year ago.

The drop in pump prices reflects the recent fall in crude-oil prices, which account for about half the cost of making gasoline.

The Auto Club of Southern California said local motorists should prepare for substantial price hikes if the pattern seen in recent years holds.

Paul Gonzales, a spokesman for the club, said the spring tends to bring higher prices but that the summer has seen somewhat lower costs in recent years.

"Prices tend to go gangbusters in March and April," Gonzales said.

Anita Mangels, a spokeswoman for the Western States Petroleum Association, said gasoline supplies also may tighten as some refiners do maintenance they deferred last year in order to make up for production shortfalls caused by the Gulf Coast hurricanes.

Mangels said that growing international demand also is pushing gasoline prices higher, and that crude-oil prices remain at historically high levels.

Oil prices climbed yesterday amid concerns about supply disruptions after militant attacks on oil pipelines in Nigeria. The West African nation is the continent's leading oil exporter and the United States' fifth-largest supplier.

Light, sweet crude for March delivery gained $1.22 to settle at $61.10 a barrel on the New York Mercantile Exchange. The exchange's price for gasoline futures slid by 2.69 cents to finish at $1.48 per gallon,

In the EIA's latest weekly survey, the West Coast had the most expensive regional gasoline, with the price down 4.6 cents at $2.41 a gallon.

The Midwest and Gulf Coast states had the cheapest gasoline at $2.17 a gallon, down 2.2 cents and 4.4 cents in each region, respectively. Among major cities, Cleveland had the best deal at the pump, down 9.3 cents at $2.11 a gallon.

The EIA report also showed prices, rounded to the nearest penny, down 3.8 cents at $2.41 in Miami; down 7.7 cents at $2.28 in New York City; down 2.9 cents at $2.24 in Chicago; down 4.9 cents at $2.23 in Seattle; down 7.2 cents at $2.22 in Boston; and down 4.9 cents at $2.15 in Houston.

Separately, the average diesel-fuel price paid by truckers fell 2.1 cents over the past week to $2.46 a gallon, the lowest level since Jan. 16 and up 44 cents from a year earlier, the EIA said.

Truckers on the West Coast paid the most for diesel at $2.59 a gallon, down 2.7 cents from last week. The Midwest states had the cheapest diesel at $2.40 a gallon, down 2.1 cents.

Reuters and The Associated Press contributed to this report.

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Copyright (c) 2006, The San Diego Union-Tribune

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Source: The San Diego Union-Tribune

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