8 May 2007 - 10:25
  • News Code: 104065

A new record high for Colorado gasoline prices was set Monday as the average cost per gallon of unleaded gasoline reached $3.089.

Craig"s average price was 7 cents higher, at $3.16 per gallon.


An "unusually high number" of U.S. refinery outages is the main reason for the soaring gas prices, said Eric Escudero of AAA Colorado.


Escudero called the recent increase "unusual," in that high gas prices tend to result from major hurricanes disrupting production along the Gulf Coast or because of conflict in the Middle East.


"It couldn"t come at a worst time," he said. "Right now, demand is picking up considerably heading into the summer driving season, and the supply is just not meeting that demand because there are so many refineries that have experienced outages across the United States."


Escudero said there are a variety of opinions as to why there are so many current refinery outages.


"The most common opinion is that we have not adequately enough increased the amount of refineries in this country," he said, in part due to environmental concerns.


While refineries have expanded and increased capacity, "We have not built a brand new refinery in the United States since the 1980s ... and during that time, there have been a lot more people on the roadways and lot more of a demand on gasoline.


"What"s happening is our current refinery system is being stretched to the limit, and we"re seeing a lot of refineries breaking down or having problems as a result."


In addition to refinery issues, Craig has location issues in regards to higher gas prices, Escudero said, noting three main factors-- cost to ship to Craig, lack of competition and the price of land.


According to the AAA Web site, states with averages gas prices higher than Craig"s include California ($3.49), Washington ($3.39), Oregon ($3.37), Nevada ($3.23), Illinois ($3.28) and Michigan ($3.19).


In Colorado, Glenwood Springs ($3.22) and Vail ($3.28) had higher listed Monday averages.


Despite gas prices going up, there is reason to be optimistic, Escudero said.


"It"s not all bad news today," he said. "It is bad news in that gas prices hit an all-time high. It doesn"t necessarily mean that gas prices will continue to rise."


He said many of the refinery outages in the U.S. are starting to come to an end, and wholesale prices of gasoline have been dropping during the past week.


"When whole sale prices dropped, that usually translates into gas prices dropping, as well," Escudero said.


He also said the price of crude oil could lead to lower gas.


"Historically, a $70 barrel of crude oil led to a $3 gallon of gas," he explained. "That"s not the case. (A barrel of crude oil has) been hovering around $65.


"So the oil prices are there to lead prices below $3 a gallon, whole sale prices are dropping, and that could mean we"ve finally reached a stabilizing point in gas prices. And prices could actually come down."


However, he added, "predicting gas prices is very unpredictable. It"s like predicting the weather or the stock market -- a lot of factors influence whether prices go up or go down."




News Code 104065

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