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Gas prices still high as inventory lags

7:30 AM, Oct 2, 2012   |    comments
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Gary Strauss, USA TODAY

Gasoline prices could soon jump by as much as 15 cents a gallon along the West Coast and Northeast corridors, where motorists already are paying some of the nation's highest prices.

The unexpected surge is coming at a time when overall gasoline prices, which typically slump after peak summer driving season, are at their highest autumn levels ever.

The culprit: record-low inventories due to production woes at several U.S. refineries.

Nationally, gasoline averages $3.78 a gallon, down from $3.83 last month but still 35 cents higher than Oct. 1, 2011's $3.43. Through September, gasoline is averaging $3.64 a gallon, easily eclipsing 2011's record $3.51.

"The two coasts are obviously the biggest sore spots," says Denton Cinquegrana, editor at the Oil Price Information Service. "Refineries are not operating at 100%; there are still nagging issues with shutdowns and seasonal maintenance that are likely to continue and keep prices at a plateau for much of October."

While supply shortages on both coasts could lift the national average by a nickel or more, California, where prices now average $4.17 a gallon, could see the biggest increase. AAA spokesman Michael Green also expects higher near-term prices in New York, Massachusetts and Connecticut, where gasoline averages $3.91 to $4.12 a gallon.

"Time to get the anti-depressants out," says Patrick DeHaan, senior energy analyst for gasbuddy.com, a Web-based price tracker. "Not only will 2012 be the highest-ever yearly average for prices, but it sets up a perilous start for 2013."

Benchmark West Texas Intermediate crude oil closed up 29 cents to $92.48 a barrel Monday, highest since Sept. 21. But crude is down more than 6% year-to-date.

Based on the cost of domestic crude and seasonal driving patterns, gasoline should be averaging about $3.50 a gallon, DeHaan says. Prices could still dip to those levels by year's end, but DeHaan and other industry analyst expect most motorists to pay $3.60 to $3.80 a gallon through November.

"People were predicting $3 gas by the end of the year," Green says. "But no one was expecting hurricanes and major refinery problems to still affect production. Obviously, it's frustrating for motorists."

USA TODAY

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