The recent sharp increase in gasoline prices has the Bush Administration worried, according to USA Today.
The administration repeated a warning of possible shortages Thursday (March 4), but it didn’t offer relief for either.
“This administration is extremely concerned” about the near-record gas prices, Energy Secretary Spencer Abraham. A day earlier, the Energy Department issued a statement expressing concern.
Separately, the head of the department’s Energy Information Administration, Guy Caruso, told a Senate panel that “many signs are pointing to a tight gasoline market this driving season,” repeating the caution from a recent EIA analysis regarding possible shortages.
The nationwide average price for a gallon of unleaded regular gas was $1.709, AAA reported Thursday. The record was $1.737 Aug. 30 of last year.
California hit a statewide record of $2.178, AAA said, 0.1 cent higher than its previous record set March 21 2003. Six states were less than a penny from their highs Thursday.
What’s behind the increases? The following reasons have been cited.
• Fears of shortages. As warmer weather triggers more driving, demand for gasoline will rise from 8.8 million barrels a day now to 9.5 million by late summer. U.S. refineries can’t make that much and depend on imported gas to fill the gap.
• Petro-politics: OPEC, the cartel that pumps one-third of the world’s oil, says it will cut production April 1. Venezuela, a major source of U.S. oil and gas, is in political turmoil that is causing work stoppages in the petroleum industry.
• Regulations: U.S. clean-air rules require lower-sulfur gas that some overseas suppliers can’t provide. Also, refineries are shifting to summer-blend gas, which is designed to lower pollution. The changeovers can cause temporary shortages.
There is some good news: Average prices are edging down in Nevada and West Virginia, which set records earlier this week, and in Hawaii, which nearly did.
But brief shortages are occurring at gas stations in central Florida, says Tom Kloza, an analyst at Oil Price Information Service, and prices there have shot 10 cents higher in as many days. A shipping accident Feb. 21 on the lower Mississippi River interrupted Florida supplies. Kloza points out that a bigger price jump typically comes in late summer.
“I wouldn’t be surprised if we blistered right through” record prices across the country.
Some lawmakers suggested Thursday that the U.S. quit pumping oil into the Strategic Petroleum Reserve, freeing that oil for refining into gasoline. That would shave only 1.5 to 2 cents a gallon from the price, though, says Lawrence Goldstein, president of the Petroleum Industry Research Foundation.