American drivers, already paying the highest retail gasoline prices on record, should expect further increases at the nations pumps due to skyrocketing costs for crude oil and a flurry of recent refinery problems, the AAA motorists group said Thursday.
“We think American drivers should brace themselves for a fairly large increase, as soon as this weekend,” said Geoff Sundstrom, AAA spokesman. “It could be an increase of around five cents a gallon nationwide.”
Prices at the pumps are already zipping along at a record near $2.40 a gallon on average, up more than a dime from last month, according to the AAA’s daily survey of 60,000 stations.
But a recent surge in the cost of crude oil to $66 a barrel, and a spate of problems at the nation’s refineries, from California to the Gulf Coast, will mean further steep increases in fuel prices.
“The price of crude oil is a big reason pump prices are in record high territory,” said Sundstrom.
“On the other hand, we have a long-term issue to resolve with regards to refining capacity. With fires and operational problems of various kinds recently, it looks like gasoline supplies have become crimped,” he said.
Around 10 U.S. refineries have reported unplanned unit shutdowns since mid-July. Refineries typically become more prone to outages in late-summer as they try to keep up with strong demand.
While U.S. retail gasoline prices are at a record in nominal terms, when adjusted for inflation they remain below the peak of around $3 a gallon hit in the early 1980s.
No relief in sight
On Wednesday, the federal Energy Information Administration warned that drivers can expect retail gas prices to average above $2.10 a gallon on a monthly basis through 2006, while truckers will face average diesel fuel costs over $2.20.
The EIA said its forecast is based on the price for U.S. crude oil staying above $55 a barrel during the same period.
“It does appear that retail gasoline and diesel prices will remain above $2 per gallon for the foreseeable future,” the EIA said in its weekly review of the oil market.
The national price for regular unleaded gasoline hit a record $2.37 a gallon on Monday, while diesel fuel rose to $2.41 -- less than half a penny from its all-time high.
Over the next few weeks, the EIA said a recent 21-cent rise in gasoline spot prices will be passed on to consumers at the retail level.
So far, only about 8 cents of that increase has made it into the pump price, the agency said.
“It takes about 2 weeks for changes in the spot price of gasoline to begin to show up at the pump and it is mostly passed through after 4 weeks,” the EIA said. “This implies more price increases lie ahead for the next few weeks.”
The agency said that after the Labor Day holiday in early September gasoline prices often decline as fuel demand drops when people go back to school and work.
However, the EIA warned that with a government forecast of an active hurricane season this year, gasoline prices “could continue to surge” beyond Labor Day if a major storm disrupts supplies in the Gulf of Mexico or more oil refinery outages occur.
Retail gasoline prices were up over the last week throughout the country, with the Midwest seeing the largest increase of 11 cents a gallon.