Gas Hits Record Prices; Will It Go Higher?

A day after gasoline prices hit record levels, drivers across the nation gritted their teeth wondering if the pain at the pump is only going to get worse.

The average national price of a gallon of gas hit $3.073 Monday, up almost a penny from Sunday's also record-setting price, according to AAA and the Oil Price Information Service.

"I have to sometimes cut back on the food I eat just to put gas in my car," Los Angeles motorist Jeff Soto told CBS News correspondent Jeff Glor.

"I don't see it going too much higher," Tom Kloza of the Oil Price Information Service told CBS' The Early Show. Kloza added that he foresees prices rising between another five to 10 cents in the next few weeks and then stabilize until late August.

"We'll go probably higher again at the end of the summer when hurricane hysteria builds," Kloza said.

But there was a glimmer of optimism: Kloza said $4 gasoline was still in the distant future.

With the prices at record highs, the head of the Energy Department's Energy Information Administration briefed lawmakers Tuesday on the gasoline outlook for the summer.

The EIA said the average retail price of regular gas jumped almost a nickel a gallon this past week, to more than $3.10 — more than $.04 higher than the previous record set in the wake of Hurricane Katrina.

"We are projecting gasoline prices this summer to average $2.95 this summer with peak monthly averages of over $3 in May and then again in August during the peak driving season," Guy Caruso, the EIA's administrator said.

Gas prices have risen more than $.93 a gallon since hitting their low point this year in January.

For example, in Washington state, the average price of gas was $3.43 a gallon, $.35 higher than it was a month ago. Washington's prices are only a few cents behind California's, which are the highest in the nation, according to AAA.

South Carolina has the lowest average gas price at $2.83, AAA reported.

Kloza said despite the high prices on the West coast, the East and Midwest will experience the biggest rises.

However, no single natural disaster is to blame for the spike in prices, reported Glor. Instead, energy experts said it is a series of repairs, accidents and breakdowns at refineries.

"The basic thing is we have tight supply and low inventory and refineries are just getting up to speed to produce for the summer. It's a bit late to be in that position," Tom Wallin, president of Energy Intelligence, said.

Some in Washington believe oil companies — still pulling in record profits and still refusing to build new refineries — are giving excuses, not real explanations, for the high gas costs.

"Isn't it interesting every year about this time, a refinery goes down for repairs," Senate Majority Leader Harry Reid, D-Nev., said. "Is that coincidental?"

Caruso warned that there's been insufficient progress on the part of the U.S. to increase domestic oil production and refinery, and as a result prices continue to remain high.

"Until that investment is made to the infrastructure to provide some
cushion in this industry the only pressure relief valve when unexpected
events occur is price. In summer we noticed it with gasoline, in winter
with heating oil and sometimes natural gas," Caruso said.

Oil prices yo-yoed Tuesday amid refinery woes and uncertainties over whether U.S. gasoline inventories can meet summer driving demand.

With refinery outages reported at a large Preem facility in Sweden, and a quickly resolved problem at a Valero Energy Corp. refinery in Texas last week, analysts are concerned that gasoline supplies, though rising, won't meet the peak demand of the U.S. summer driving season, which begins at the end of May.

Unplanned outages and scheduled maintenance at refineries, sluggish imports and strong demand have plagued gasoline stocks since early February. At least a dozen additional partial shutdowns have occurred in the U.S. and internationally that cut refining capacity.

"The expectation is that refinery utilization should increase, and that the majority of the increase would be weighted toward production of gasoline," said Brad Samples, an analyst at Summit Energy, noting that gasoline-producing units have been "down the most" amid a recent spate of refinery outages.