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Gas prices poised to spring forward ; Threat of shortage also looms if demand soars |
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| USA Today; Arlington, Va.; Mar 4, 2002; James R. Healey; The heady days of $1-a-gallon gasoline are all but gone, and there's a chance the gas might be, too, at midyear. "Every summer this decade, there is the possibility of a shortage. And it increases every year," says Tom Kloza, analyst at Oil Price Information Service (OPIS). That's because oil companies can't refine or import as much gasoline as Americans are apt to use if the weather's good and the economy improves fast. And weak refineries will close instead of spending on overhauls to produce low-sulfur gas the federal government is requiring, cutting gas supplies. Gas consumption could peak at 9.5 million barrels a day in June or July if use patterns follow the strong trend reported last week. The 158 U.S. refineries can pump out about 8.5 million barrels a day, Kloza says, and the difference can't be made up with imports. "You can't import boutique fuels," he says of summer blends required in some areas to reduce air pollution or support local industries. Kloza doesn't predict shortages, only cautions that they are more likely as rising demands are placed on the already fragile U.S. gas- supply network. OPIS retail analyst Fred Rozell says gas prices could fall, briefly, as refineries unload winter-blend gas they must stop selling by the end of this month. Winter and summer blends are required to meet anti-pollution standards during cold and warm weather, when gas blends behave differently. In addition to the seasonal climb, gas prices will be pushed up as prices of crude oil begin to climb. The Organization of Petroleum Exporting Countries (OPEC), a cartel of mostly Middle East nations, has vowed yet again to keep production low to raise prices. This time, OPEC has enlisted Russia, Norway and other oil nations, and production controls are being taken seriously. And it is assumed that the United States will attack or invade Iraq, disrupting oil supplies. Petroleum speculators are acting as if "it's Memorial Day in 1944 and Baghdad is Omaha Beach," says analyst and consultant Peter Beutel in his Cameron Hanover Daily Energy Hedger newsletter. He believes U.S. military action against Iraq is not imminent and that the speculators are overreacting. Still, perception becomes reality, and it spurred traders, fearing shortages, to bid up OPEC oil past $20 a barrel last week for the first time in months. Light sweet crude for delivery in April closed Friday at $22.40 a barrel up 66 cents. And wholesale gas prices for warm-weather months are hovering closer to 70 cents than the 60-cent mark of a few weeks ago. The wholesale price for unleaded regular for delivery in April was 70.6 cents a gallon Friday, up 2.82 cents, instead of the tenths-of-a- cent movement that has been typical. The higher wholesale prices mean traders expect increased demand, decreased supply or both. |
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