Gasoline prices resting just below record highs

/ Source: news services

The average price American motorists pay for a gallon of gasoline rose nearly 2 cents to $1.743 a gallon last week — just a half-cent shy of a record high — the U.S. government reported Monday.

Prices will continue marching higher due to tight supplies and will average an estimated $1.83 per gallon in April and May, according to the U.S. Energy Information Administration.

The average retail cost for regular unleaded gasoline is now 0.4 cents below the record $1.747 per gallon set last August 25, the government said.

The weekly survey of roughly 800 service stations by the Energy Department’s analytical arm showed the average pump price was 5.3 cents a gallon higher than a year ago.

Drivers in California are suffering the most, with gasoline prices well above $2 a gallon for the past four weeks, although average prices in the state eased 1.4 cents to $2.083 a gallon last week.

Rising prices have attracted the attention of lawmakers from both political parties.

Democratic Sen. Ron Wyden of Oregon on Monday reintroduced a bill that would require the Federal Trade Commission to act on what he calls anti-competitive industry pricing policies.

“It’s past time that government regulators opened their eyes to reality of rampant price manipulation by gas companies and protected drivers from getting pummeled at the pump,” Wyden said.

The FTC earlier this month opened an informal probe into California retail gasoline prices — the highest in the nation — at the urging of Democratic Sen. Barbara Boxer of California.

Oil and gas refiners deny using any anti-competitive practices. They blame high prices on tight supplies on dozens of different gasoline blending rules for metropolitan areas and the lack of enough gasoline imports.

Republican Sen. Chuck Grassley of Iowa said soaring gasoline prices are a good reason for the Senate to pass a stalled energy bill.

“This bill is too important to our American economy to let it die,” Grassley said, pointing to provisions that would double the use of corn-blended ethanol as a gasoline additive. The bill also includes billions in tax incentives for oil drilling, coal-fired utilities and a natural gas pipeline.

Prices are up nationwide because of strong fuel demand, low inventories and high crude oil costs, which account for almost half the price of gasoline.

Guy Caruso, EIA administrator, said at an oil industry meeting in San Antonio that he was “really concerned” about the U.S. gasoline inventory that is about 13 million barrels lower than the agency had projected.

European gasoline imports have kept the U.S. market from sinking to critically low levels in the past, said Matt Simmons, chairman of Houston-based energy investment bank Simmons and Co. International.

But dwindling European gasoline imports could spell trouble for U.S. drivers during the peak summer driving season, Simmons said.

“We have really backed ourselves as a country into an unbelievable corner that I think ends up finally resulting in gas lines again,” Simmons said, referring to the aftermath of the Arab oil embargo of the mid-1970s.

The retail price for cleaner-burning reformulated gasoline, sold in many metropolitan areas, rose 1 cent in the latest week to $1.838 a gallon, according to the EIA survey.

Passage of energy bill more likely
High energy prices make the passage of a comprehensive energy bill more likely, the chairman of the U.S. House energy and commerce committee said late Sunday.

The bill, supported by President Bush, needs the agreement of only two more senators to bring it before the full Senate for consideration, said Rep. Joe Barton, a Texas Republican.

"I think the chances are pretty good," Barton said to reporters after a speech to the National Petrochemical and Refiners Association (NPRA). "Most energy prices are near to all-time highs. Sooner or later people are going to say, 'You know, we have a bill that would do something about that."'

The final version of the bill has already passed the U.S. House of Representatives. The Republican majority in the Senate is expected to pass it if comes up for a vote.

The bill includes a protection for makers of methyl tertiary butyl ether (MTBE) against lawsuits claiming the pollution-reducing petrochemical additive is a defective product.

Most states have banned the use of MTBE because it has been found to cause groundwater contamination, leading to lawsuits against refiners. The energy bill would also increase the production of ethanol, a pollution-reducing alcohol made from grain, to 5 billion gallons (22.7 billion liters) a year.

NPRA President Bob Slaughter said the pressure of high prices may force Congress to realize that the "energy lite" strategy of breaking the comprehensive bill into smaller parts would take too long.

"The quick way is to go back to the comprehensive bill," Slaughter said.

The Associated Press and Reuters contributed to this report.