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.

[PigRigger]

"gas to hit $3 per gallon...."

Won't happen, GW wants to get reelected.

To most Americans there is nothing more exhilarating important than driving there SUV's, watching cable television, and fast food at a reasonable price.

Hike the price on any one of these and all hell will break loose.

[traumer]

AUSTIN, TX: $1.51 - 1.57 (unleaded basic)

[MikeJ]

If you believe this, you could be a rich man! Check this out:

http://quotes.tradingcharts.com/futures/quotes/HU_.html

The June '04 futures price for unleaded is only slightly higher than today's price.

[Dark Wing]

FYI

[newgeezer]

Sure.

But, the FReeper specifically mentioned "Uncle Sam" and seemed to be saying if not for those (Federal) taxes, he'd be paying ".75 cents" per gallon.

[Historicus]

Sounds good.....we can start by getting all those police officers out of their Crown Vics. Those vehicles get worse mpg's than an Explorer.

[claudiustg]

My Honda Insight gets an average of 61.3 mpg. If gas goes to $3 it's resale value goes up. If I buy some oil company stocks this will prove to be a win, win!

[PigRigger]

"My Honda Insight gets an average of 61.3 mpg..."

What do you think of the Insight in general? Would you buy it again?

[HungarianGypsy]

Americans don't care. Or why would they keep buying so many gas guzzlers? Maybe because some of us have larger families?

[staytrue]

OPEC has excess capacity and does not want prices this high. The will produce more because high price does lead to people conserving which means prices fall in the long run and once people start conserving, it is hard to get them to stop. It is awefully hard to rip the extra insulation out of your house for example.

Plus, Iraq has more oil than SA and has the potential to pump 10 million bls per day instead of the 2 million it does now.

If you think I'm wrong, the open a commodities account and buy July oil. The people who have money on the line in the futures market are saying 3 dollar gas is not in the cards.

[ZULU]

This is such poppycock.

Barring a major war or an oil embargo by OPEC, there is NO need for prices to reach $3.00 per gallon for motor fuel.

The world is drowning in oil. It doesn't come from dead dinosaurs, it is a product of geomorphosis and was abiotically produced. The only issue is locating easily accessible sources of it - sources which replenish themselves as the more petroleum moves up from the earth's bowels. Is it an inexhaustible supply? Of course not. Nothing is inexhaustible, including water and oxygen. But there is enough around to last several centuries at the current rate of usage, and beyind that when fuel cell technology is refined and available - if Aramco or Mobil don't buy up inventor's patents.

These international oil cartels are national enemies. They are not American companies, they are international conglomerates who conspire to raise prices, shuttle crude and refined products from one country to another, and conspire to artificially inflate the price of, and control the availability of oil. When they are not pandering to the Wahhabist nutcases who are their prime parnters in crime.

The Oil companies should be nationalized and turned into public utilities like water and electric supplies. They are gangsters, thugs and thieves and are setting us up for another big hit. This single industry has the ability to drive the entire world into a major depression, throttle our economy, raise food prices and put thousands of Americans out of work.

I HATE big oil companies - they are EVIL.

[Tumbleweed_Connection]

Big engines are back
With fuel efficiency rising
V8 brawn is hot option
for cars, trucks

[TomHarkinIsNotFromIowa]

I heard that Haliburton was buying all the wind.

[lilylangtree]

Where's the federal investigation into why the higher prices that was announced in August since the prices have never returned to the pre-Iraq war?

[BSunday]

Quick! Everybody hide your Dodge's with the hemi engines before the public executions begin!

[Henchman]

$3.00/ gal of gas is very IMPROBABLE - it is an election year. $3 / gal for gas = a Degenerat prezIdent.

[claudiustg]

---"My Honda Insight gets an average of 61.3 mpg..."

What do you think of the Insight in general? Would you buy it again?---

I love that little car. It's aluminum: weighs 1700 pounds. It's fast, quite, comfortable, and very tech. The only thing is it's small, but that's why we have two other cars. My wife drives a Honda Civic 4 door and we have an '87 VW Vanagon Westfalia Syncro for camping and hunting. That's the one with full time 4 wheel drive, pop-up top, refrigerator, stove, sink, 2 bunks.
I use the Insight mostly for commuting about 50 miles a day. I fill it up with 10 gallons about every two weeks. It's a fabulous little car!

[the invisib1e hand]

Summertime shocker: Gas could hit $3 a gallon

there is no earthly reason for this to occur, outside of global upheaval.

Proven reserves are adequate to last perhaps a thousand years.

if increasing demand doesn't get the oil where it is needed, it will only be because the market mechanism was impeded by either a terrorist or political act.

[Axenolith]

>Summertime shocker: Gas could hit $3 a gallon

there is no earthly reason for this to occur, outside of global upheaval.

It has nothing whatsoever to do with reserves, and I said nothing such. What you're saying is, regardless of the fact that the dollar has shed near 30% of its value versus most currencies and precious metals and is being pumped out furiously, that the OPEC nations will continue to accept near the exact same amount of them for a barrel of oil. Thats really magnanamous of them in light of the fact that all of the other neat stuff they turn around and buy with those dollars will cost them 30% more...