Summertime shocker: Gas could hit $3 a gallon

Chicago Sun-Times ^ | 1/16/04 | Lucio Guerrero

[Tumbleweed_Connection]

Drivers of SUVs and other gas guzzlers may want to keep their vehicles parked over the summer.

That's because some experts are saying that gas could -- gulp -- hit the $3-a-gallon mark.

"It is not only possible, it is probable," said Fred Rozell, director of gasoline pricing for Oil Price Information Service, which tracks and reports on the oil industry. "In the summer, we consume more gasoline than we produce.

"[This year] we won't have that extra supply to help us."

Winter weather, bolstering demand for heating fuels, already has cut U.S. crude stocks to the lowest level since 1975.

And with simple economics -- in particular the supply and demand rule -- consumers can expect the price of gas to reach record levels. Those prices would especially be possible in Chicago, where government regulations require gas stations to supply more costly reformulated gasoline to reduce smog.

"This could be the year that gasoline prices start to change the way people behave," Rozell said. "They may drive less or look to buy more fuel-efficient vehicles and get rid of their SUVs."

That $3 threshold shouldn't come as a big surprise to pump watchers. Over the last few days, prices at the pump have done more than just trickle upward --they have soared. Prices have surged more than 7 cents a gallon in the last three weeks.

Several factors are being blamed for the uptick, including rising crude oil prices, a weaker U.S. dollar, colder weather that drove up demand for home heating oil, and two U.S. gasoline reformulations, said analyst Trilby Lundberg.

Earlier this week, the all-grades average retail price of gasoline was 8 cents higher than it was at this time last year. The national weighted average price of gasoline, including taxes, at self-serve pumps was about $1.55 for regular, $1.65 for midgrade, and $1.74 for premium.

But those numbers are only expected to rise.

According to the U.S. Energy Information Administration, the forecast for prices to remain stable through the summer banked on crude oil being about $30 a barrel. In the last week, the price of crude oil has flirted in the mid-$30s and could rise further.

Retail analysts say gasoline costs rise about 2.5 cents per gallon for every $1-a-barrel increase in the price of crude oil. And combine that with near record low inventories -- some of the lowest since the long-line days of 1975 -- and drivers may want to learn that CTA map.

But not everyone is ready to buy into the higher prices.

"There is no way that anyone can predict the price of oil next week, let alone next summer," said Geoff Sundstrom, a spokesman for the American Automobile Association. "There is no need to start scaring the consumer with what prices might be."

Sundstrom said the reasons for the short-term increase have been the cold weather and the low inventory, both of which he says will be over in the next few months.

[mewzilla]

Americans don't care. Or why would they keep buying so many gas guzzlers?

[biblewonk]

I love expensive gas, ping.

[Bikers4Bush]

I may carpool more but other than that I won't change a thing.

[joesnuffy]

Keeping the Saudis happy....dont want them cashing in those bonds just yet....

[Brilliant]

I don't think this would be too shocking. If you don't like it, then encourage your Congressman to pass the President's energy plan.

[joesnuffy]

Time to start drilling the ANWR

[mewzilla]

Or drive a fuel-efficient car.

[dakine]

$3.00 a gallon when making $40 an hour is not as tough as $1.05 a gallon when making $5.00 an hour 20-25 years ago... U.S. consumers will adapt...

[Uncle Miltie]

Got my V8 just in time; before they outlaw them.

[Ingtar]

Perhaps ANWR drilling will pass when the wallet drilling commences.

[LN2Campy]

At $3.00 per gallon, it would still be cheaper, in relative terms than when I got first started driving (1979).

[MichaelP]

It ain't gonna happen! The public outcry and pressure will mitigate the price. The government will open the strategic reserve. The President does want to be reelected...

Mike

[AAABEST]

And the Gulf.

[PersonalLiberties]

Sorry, I accidentially hit private message with the following post

"Ever notice how when gas prices to up, so does food and all other consumer goods. Also, with gas that high in the Summer looks like tourism could take another hit.

What ever happened to we would rebuild Iraq using their oil money, not our own billions plus, paying higher gas prices?"

[mewzilla]

Just as long as they don't whine. As for the folks who can least afford it, them I have sympathy for. Supply and demand works against them. Pity more people don't keep that in mind. I was looking at a Toyota Prius recently. Neat car, but even at $20,000 the folks who might be most inclined to buy a fuel-efficent car would have a tough time affording it. Lower income folks really get hit in the wallet with high fuel prices.

[Land of the Free 04]

At $3.00 per gallon, it would still be cheaper, in relative terms than when I got first started driving (1979).

Oh, man, now you're in trouble. You'd better not say that in a free market price rises with demand, or you're toast!

[newgeezer]

I love expensive gas

It'll be too bleepin bad if the price of big, used SUVs plummets the way muscle cars did in the Seventies. Tsk, tsk, tsk...

Of course, the difference is, muscle cars really were cool. :-) I can't foresee a day when car shows are brimming with "classic" SUVs. Blecccch.

[Petronski]

Build More Refineries

[CROSSHIGHWAYMAN]

This is another zinger for the Gore wing of the environmental-wacko set.

Oh sure, high gas prices will make people conserve and drive less, but we want lower gas prices too.

It's like the wind farm issue.

Wind power is good but it is bad........blame it on Bush.......and whatever you do..........

don't build a wind farm in my front yard.