A Lot Depends on Refineries, Weather and Driving Habits; A Raccoon and an Opossum
Gasoline prices, already flirting with $3 a gallon, could move even higher during the summer driving season. It all depends on refineries, weather and drivers' tolerance for expensive fuel.
Rising gasoline prices already are pinching sales of gas-guzzlers like sport-utility vehicles and putting consumers in a sour mood. High gas prices in particular affect working-class shoppers, and they're a big reason why sales growth at Wal-Mart Stores Inc. has been anemic in recent months. But some more-affluent consumers are changing their habits as well. Omar Galicia, a Dallas attorney, says he is driving less during weekends because of high gas prices. If prices keep going up, he says he'll trade in his Dodge Charger for a more fuel-efficient car. "I don't have that long of a commute, but it impacts your wallet," he says.
Still, pain at the pump hasn't kept Americans from driving, which is part of the reason gasoline prices keep rising. Many workers need to drive to earn a living, and cutting back isn't an option.
"I've been trying to find a job that is closer to home to save some gasoline, but sometimes it's difficult because the work is all over the place," says Jariel Herrera, a 32-year-old granite and marble installer in Dallas. "My job is to go from one place to the other. I can't not drive."
The latest Energy Information Agency data show gasoline demand in the past few weeks rose 2.3% from the same period last year, outstripping growth in refinery capacity. That, in turn, is making the U.S. ever more dependent on gasoline imports.
Regular gasoline nationally averaged $2.97 a gallon, AAA reported yesterday. While that's still about nine cents shy of the highest price ever recorded, which was in September 2005, it is a record high this early in the season. Gas was selling for just $2.70 a gallon as recently as the beginning of April.
How high prices go this summer depends largely on what happens to the refineries that crank out the nation's fuel. Refinery outages in recent weeks, largely for maintenance, are part of the reason fuel prices have rocketed up. If refinery operations smooth out, gas prices could remain stable or even fall.
But the picture could be far bleaker if supply interruptions persist or intensify. In 2005, hurricanes Katrina and Rita smashed into the petrochemical-refining belt in the Gulf of Mexico, idling more than a quarter of the nation's refining capacity and sending gasoline prices climbing. Another hurricane striking Louisiana or Texas this year, even if less severe than the storms in 2005, could have a similar effect on pump prices.
"There's very little slack in the system, so it doesn't take a lot to go wrong to send prices higher," says Doug MacIntyre, senior oil-market analyst from the Energy Information Agency, a federal agency.
Demand for gasoline has been growing at a faster pace than domestic refining capacity. The U.S. has filled that gap by importing fuel. The problem now is that imports aren't as readily available as in the past.
