Sunday, April 22, 2007

Gas prices spring forward

The price of gasoline is an average of 10 cents a gallon higher than a year ago, and weekly motor-fuel demand reached a record this month. And the traditional summer driving season hasn't started yet.

By U.S. News & World Report

Alongside crocuses and baseball, there's a new harbinger of spring: the gasoline price run-up.

After 11 consecutive weeks of price increases, U.S. motorists last week were paying $2.88 a gallon, up 27 cents in just three weeks and 33% since late January.

Americans are no longer waiting until summer to hit the road, the Energy Information Administration says, with March and April demand strong for several years.

"For years, the typical summer driving season was considered to occur between the Memorial Day and Labor Day holidays," the agency said in a recent analysis. "While this characterization still holds, in recent years, demand patterns have shifted somewhat to include more robust levels of gasoline demand earlier in the season with a pre-summer peak in gasoline prices."

What's different now
But this is a spring price peak with a vengeance. Even with the new average price nearly 10 cents a gallon higher than a year ago, weekly U.S. motor-fuel demand reached a record high for April. Meanwhile, supplies were even tighter than they would have been with the usual slowdown in gasoline production, as refiners switch to making fuels that meet special environmental requirements for summer.

Two major refinery fires, one at BP's giant Whiting, Ind., facility and the other at Valero Energy's McKee plant in Sunray, Texas, will result in lost gasoline production for weeks.

In California, where special clean fuels are required by law, production of gasoline dropped 7% in one week, with a fire at a Chevron facility in Richmond and an unplanned outage at the BP refinery in Carson. The average price for regular grade in California was $3.31 per gallon, 41 cents a gallon above last year's price.


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