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Gas Pains: Up 19 Cents In 3 Weeks

Gas prices soared an average 19 cents in the past three weeks due to lingering high crude oil prices, growing demand and higher refining costs, an industry analyst said.

The average retail price for all three grades increased 18.95 cents to $2.32 per gallon between March 18 and Friday, said Trilby Lundberg, who publishes the semi-monthly Lundberg Survey of 7,000 gas stations around the country.

"Some of that was catching up with crude oil prices," Lundberg told CBS Radio News. "Crude oil hit its all-time record one week ago, and the rest is demand building this time of year and costs at the refining level building this time of year."

The most popular grade, self-serve regular, was priced at $2.29 a gallon, while customers paid $2.38 for midgrade. Premium averaged $2.48 a gallon for the period.

There may be some relief in site, however. Crude prices, which briefly reached $58 last week, are likely to stay above $50 a barrel well into next year, Lundberg said.

"The other reason is that a great deal of the new refining costs are being passed through into gasoline. If most of that is done, gasoline prices might drift down from here," she said.

Last week, the Energy Department said it expects gasoline prices to average $2.35 a gallon nationwide in May, the dawn of the heavy summer driving season. The Energy Information Administration reported that gasoline demand for this summer is projected to be 9.3 million barrels a day, up 1.8 percent over last summer, and the highest on record.

"The lowest regular grade price is now in Newark, N.J., at $2.06 on average, and the highest is in Bakersfield, Calif., at $2.62," Lundberg said.

Rising gas prices are hitting small business people hard, especially taxi drivers, companies with small fleets, fast food delivery drivers and others, said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp.

Crown Limousine built a $25 fuel surcharge into its regular rates in January for rentals of its stretch Hummers, Cadillac Escalades and Ford Excursions.

"Those are the gas guzzlers," said manager Jackie Rizkalla.

The company also raised its regular fuel charge for airport and other business trips by $1. Rizkalla said most people don't complain about the extra charges because they know gas has gotten more expensive.

Raising retail prices is a trend that's spreading across the country, reports CBS News Correspondent Trish Regan. According to the latest reading on inflation, consumer prices jumped four-tenths of a percent in February, the fastest increase in four months.
Analysts say store owners like Yonkers, N.Y., florist Peter Grammatas have little choice but to raise prices.

"When you're filling up the van, $30 you would be able to fill it up," Grammatas said. "Now, you need at least $50 and when you're doing it two, three times a week, it adds up."

Rizkalla said the limo company would probably absorb any future gas price hikes this year.

"We're not that worried about it," she said. "We wouldn't raise our rates again until another year."

As costs go up, consumers, who are already getting hit themselves at the pumps, may decide to cut back on their personal spending, reports Regan. Overall, higher gas costs will leave Americans with an estimated $70-75 billion less to spend on other items this year.

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