Gasoline Prices $purt
The phrase "sticker shock" used to refer to the cost of a car, not the cost to fill it up. But with gasoline up a record-setting 12 cents, much more in some parts of the country, it certainly can apply.
The national average, $1.62, is just 4 cents shy of last summer's all-time high, and the summer driving season is still more than a month away, reports CBS News Correspondent Cythnia Bowers.
"I'm not happy, not happy, I have a teenager she drives, it's costing an arm and a leg," groused one driver.
This at a time when oil prices have remained steady. OPEC, which had planned to cut production last month, never did, which means there's plenty of crude out there. But there's a perception in the oil markets that down the road there might not be enough gas.
It seems you don't need an actual shortage to send prices soaring, just the idea that there might be.
"Some of its psychological. Everybody remembers last summer and they're afraid of something similar happening this summer," explained Bill O'Grady of AG Edwards.
Traders know a higher than normal number of refineries are off line and inventories are at a seven year low. Further clouding the issue are clean air standards that mean different parts of the country use different kinds of gas, which makes the market a lot less flexible.
"We have to some extent balkanized the U.S. gasoline market, whereas if a shortage develops in Chicago, gasoline in New York or Houston may not meet that standard," said O'Grady.
Analysts say the high prices are a signal to the refiners to get back on line quickly — it' a gold mine out there. With oil prices so low and gas prices so high, refiners stand to make as much as $17 on every barrel they sell.
A case in point: Exxon. Rising energy prices have unleashed a gusher of profits for oil and gas companies. ExxonMobil, the world's largest, was the latest.
ExxonMobil had a $5 billion profit in the first three months of this year — up 51 percent from a year ago, reports CBS News Business Correspondent Anthony Mason. Profits at Conoco, the fifth largest oil company in the United States, were up 57 percent.
But the energy companies are sensitive to any suggestion they might be squeezing their customers. "And I didn't see CBS News here when crude was at 10 a barrel," said ExxonMobil CEO Lee Raymond.
Just two years ago, as oil prices plunged, energy companies were in trouble. The belt tightening they implemented then is paying off now.
"They cut their costs during a time when they thought they were going to see extremely low commodity prices for the foreseeable future. How quickly tings can change," said Nancy Vaughn of the Petroleum Finance Institute.
The information age has created a surge in demand and energy companies are reaping the profits.
How long can prices stay this high? Four or five years analysts say. ExxonMobil's $5 billion profit in this quarter was actually slightly less than the $5.1 billion it earned in the last — and that was an all time record for an American company.
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