$4 for a gallon of gas? - It's looking more likely

Charleston Gazette Article, 3/13/08:
 
Gasoline prices across the state and the country are as high as they've ever been, and federal economists are predicting even steeper prices this spring.
By Joe Morris
Staff writer
Gasoline prices across the state and the country are as high as they've ever been, and federal economists are predicting even steeper prices this spring.
 
According to the American Automobile Association, the average price for unleaded gas in West Virginia reached $3.37 per gallon on Tuesday, while in Charleston the average was $3.43. Nationally, the average was $3.25.
 
Prices have never been higher.
 
According to the federal Department of Energy's Energy Information Administration, the monthly average gasoline price nationwide is likely to crest at $3.50 this spring. In some regions, the price could exceed $4 per gallon, the EIA says in its Short-Term Energy Outlook report published this week
 
West Virginia gas prices typically run above the national average, partly because taxes are higher in the state. State drivers pay 50.6 cents per gallon in taxes, or 7.7 percent more than drivers nationwide.
 
Other factors contributing to above-average prices include the state's remoteness from refineries and pipelines and a dearth of gas terminals, making it harder to build up inventories.
 
There's just one refinery and four gas terminals in the state, and no pipelines cross it. Only one other state lacks access to any pipelines, said Jan Vineyard, executive director of the West Virginia Oil Marketers and Grocers Association.
 
Just four states - California, Hawaii, Oregon and Washington - now have higher gas-price averages than West Virginia. So if prices anywhere do breach $4 per gallon, West Virginia prices aren't likely to be much lower.
 
Over this year, gas prices nationally are projected to average $3.21, or 40 cents more than last year, according to EIA economists. In 2009, prices are expected to average $3.06.
 
Gasoline prices across the state and the country are as high as they've ever been, and federal economists are predicting even steeper prices this spring.
 
According to the American Automobile Association, the average price for unleaded gas in West Virginia reached $3.37 per gallon on Tuesday, while in Charleston the average was $3.43. Nationally, the average was $3.25.
 
Prices have never been higher.
 
According to the federal Department of Energy's Energy Information Administration, the monthly average gasoline price nationwide is likely to crest at $3.50 this spring. In some regions, the price could exceed $4 per gallon, the EIA says in its Short-Term Energy Outlook report published this week
 
West Virginia gas prices typically run above the national average, partly because taxes are higher in the state. State drivers pay 50.6 cents per gallon in taxes, or 7.7 percent more than drivers nationwide.
 
Other factors contributing to above-average prices include the state's remoteness from refineries and pipelines and a dearth of gas terminals, making it harder to build up inventories.
 
There's just one refinery and four gas terminals in the state, and no pipelines cross it. Only one other state lacks access to any pipelines, said Jan Vineyard, executive director of the West Virginia Oil Marketers and Grocers Association.
 
Just four states - California, Hawaii, Oregon and Washington - now have higher gas-price averages than West Virginia. So if prices anywhere do breach $4 per gallon, West Virginia prices aren't likely to be much lower.
 
Over this year, gas prices nationally are projected to average $3.21, or 40 cents more than last year, according to EIA economists. In 2009, prices are expected to average $3.06.
 
Globally, oil prices are under pressure in the face of political instability in producing countries including Iraq and Nigeria, while the government of another big producer, Venezuela, has threatened to disrupt exports to the United States over a dispute with ExxonMobil Corp.
 
Consumption globally and domestically is expected to grow at a slower rate than previously thought, the EIA report says. In the United States, with the economy in or near recession, consumption of liquid fuels and other petroleum products is expected to grow by 40,000 barrels per day, compared with 100,000 barrels projected a month ago.
 
Gasoline consumption is expected to rise 0.3 percent this year and 0.7 percent next year, compared with last year's increase of 0.4 percent.
 
Meanwhile, prices for crude oil - the biggest factor determining the retail cost of gasoline - are likely to stay high, though not as high as they are now. The EIA projects per-barrel costs to average $94.11 this year, compared with $72.32 last year.
 
But commodities analysts say they see evidence of a moderation in the short term. According to a price report issued this week by the New York investment bank Goldman Sachs Group Inc., its analysts are projecting an average crude price of $90 per barrel for this spring, compared with last week's record high of $106.54.
 
The prices would likely go up again later in the year, as the U.S. and Chinese economics are predicted to strengthen, the report says.
 
Despite the increases, gasoline still hasn't broken the price record set in 1981 when adjusted for inflation. To surpass the $1.48 per gallon that drivers paid 27 years ago, gas prices would need to reach $3.68.