Wednesday, April 10, 2002

Gas prices for summer look volatile

Mideast supplies uncertain

By Mike Boyer,
The Cincinnati Enquirer

        The only thing certain about gasoline prices as the summer driving season approaches is that pump prices will be driven by increasing uncertainty, analysts and distributors say.

        Regular gasoline prices through September are expected to average $1.46 a gallon nationally, the U.S. Energy Information Administration reported this week in its latest energy outlook.

        While that's down 8 cents a gallon from last summer, it is the third-highest on record for the period.

        Prices soared to a record $1.713 in May last year after setting a record for average prices the prior summer.

        While gasoline inventories are about 17 million barrels higher than they were a year ago, retail prices, which sank to a 2 1/2-year low in December, have risen 30 percent this year in the wake of supply cuts by major world oil producers and concerns about interruptions in the Middle East.

        Tuesday, the average price for regular gasoline in Cincinnati was $1.44, up from $1.20 a month ago but below the $1.52 a gallon a year ago, according to the AAA Daily Fuel Gauge, compiled from a survey of stations.

        In Northern Kentucky, the AAA said the average for regular was $1.47, up from $1.21 a gallon a month ago but down from $1.57 a gallon a year ago.

        “We won't see prices as low as they were last fall through the rest of this year or next year,” said Mary Hutzler, acting director of the Energy Information Administration, the statistics branch of the Energy Department. “OPEC's discipline in setting production levels” will help push up prices, as will an increase in gasoline demand as economies recover, she said.

        All of which leaves Tristate gasoline distributors scratching their heads.

        “I don't know what prices will do,” said Jeff Lykins, president of Lykins Oil in Milford and outgoing chairman of the Ohio Petroleum Marketers Association.

        Likewise, Steve Harper, chairman of the Kentucky Petroleum Marketers Associations, said, “It's tough to determine what prices will do, but for the next two to three months, we'll probably see higher prices.”

        Gasoline refineries are in the midst of turning from winter to summer gasoline formulations. That typically causes prices to spike, Mr. Lykins said.

        “Under normal market conditions, you wouldn't expect prices would be as high as last year,” he said. “But the Middle East is the wild card.”

        World oil prices declined Tuesday as Iran and Libya held back from joining with Iraq in its suspension of crude shipments to countries allied with Israel.

        Also, the incentive of higher oil prices might encourage non- OPEC producers such as Russia and Mexico to do the same, analysts said.

        The Associated Press and Bloomberg News contributed to this report.


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