Orange County’s Price at the Pump Hits $3, With Cost Expected to Climb Again

By Andrew Galvin, The Orange County Register, Calif.

Apr. 21–Gasoline prices in Orange County reached a record high Thursday, with the average price of a self-serve gallon of regular hitting $3, according to the Automobile Club of Southern California. Prices are expected to go 15 to 20 cents higher before dropping again, possibly around Memorial Day, experts say.

The previous record for Orange County’s average price was $2.97 on Sept. 6, a week after Hurricane Katrina knocked out oil rigs and refineries on the Gulf Coast.

It’s no hurricane driving up prices now, but rather a confluence of market and industrial forces. Traders and speculators have pushed up crude oil futures prices. Meanwhile a shortage of ethanol, a key gasoline additive, is reverberating in wholesale gasoline markets. Also, the aftereffects of Katrina are still being felt, with some refineries that put off maintenance after the hurricane undergoing it now.

“There’s plenty of gas out there and there’s plenty of oil, but investors are bidding up the price,” said Auto Club spokesman Paul Gonzales. “People are buying today because they think it’s going to be more expensive to buy tomorrow — and that sets the market at a hotter and hotter rate.” Retail gasoline prices generally lag movements in the wholesale market by a week or so. With spot-market wholesale prices still rising, drivers can expect to see pump prices around $3.20 in coming weeks, Gonzales said.

Still, prices “certainly will come back down,” said Duncan Cinquegrana, West Coast markets editor at Oil Price Information Service. “There’s going to be a backlash from the public. — They’re going to drive less.” Prices will probably fall back below $3 a gallon in about three to four weeks, as some refineries come back online and as foreign refiners ship gasoline to the United States to take advantage of the high prices, Gonzales said.

An Orange County Register weekly survey of 38 service stations also found an average price of $3 a gallon Thursday.

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