Soaring Gas Prices
Energy Secretary Spencer Abraham said Thursday that the national price for retail gasoline could average between $1.60 and $1.70 per gallon this summer, which would top the record high pump price of $1.68 per gallon set last June.
Drivers in Chicago would take $1.68 per gallon in a New York minute. In Chicago, reports CBS News Correspondent Cynthia Bowers, gas is going for well over two bucks a gallon.
"I don't think they can blame this one on OPEC, I'm not sure what this one is all about," admitted one baffled driver.
Here's what its about: the refinery fire in St. Louis is doing just what the analysts predicted. It sent fuel prices up 20 cents a gallon in parts of the Midwest — at one station in Chicago it's $2.39 for premium. All because that refinery is one of the few that makes the kind of gas required here by government clean air standards that mandate different fuel standards for different areas.
"By slicing and dicing the U.S. market into so many small segments, you've got a series of smaller refining industries tied to certain sections of the country," explains AG Edwards' Bill O'Grady.
Abraham, in testimony before a House appropriations subcommittee, also warned that spikes in retail prices were likely this summer because U.S. refineries are running at near full capacity to meet consumer demand.
"I think we're going to see this pattern of price spiking continuing in the months ahead," Abraham told lawmakers, in response to a question about the gasoline supply outlook for the summer. "We don't have a lot of excess (refining) capacity right now."
Price spikes would occur if a U.S. refinery was forced to shut down unexpectedly or if there was a pipeline problem, he said. In either situation, "the supply at least temporarily will be reduced," Abraham said.
In its weekly gasoline price report issued on Monday, the Energy Department said U.S. retail gasoline averaged $1.626 per gallon. That nationwide average is already far above the summer peak price of $1.52 per gallon which the department had previously forecast would be reached in June.
Prices have marched higher in recent weeks on historically low gasoline supplies and strong consumer demand.
The highest retail gasoline prices are typically on the West Coast, with lower prices in southeastern states.
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