U.S., Nevada gas prices are heading higher

Chris Jones

Wednesday, March 27, 2002 | 11:54 a.m.

Gasoline prices in the United States are expected to rise by as much as 15 cents per gallon in the coming weeks, but a government expert said the average price Americans pay to refuel their automobiles should remain well below the inflated levels of early last year.

Those close to the situation in Southern Nevada said locals should also expect higher gas prices as the summer driving season approaches.

Doug MacIntyre, a senior oil market analyst for the Energy Information Administration, an independent division of the U.S. Department of Energy, said Tuesday that increased demand for gasoline over the past five weeks has tapped into America's gasoline inventory.

And speculation that tensions in the Middle East could escalate and cause a disruption to the market helped push crude oil futures today to a six-month high of $25.43 a barrel, an increase of nearly 30 percent since the start of this year. MacIntyre said those and other factors should continue to cause higher fuel prices at the pump.

"Under current conditions, there's probably still another 5 to 15 cents rise left in gasoline prices," said MacIntyre, whose organization this week reported U.S. retail gasoline prices have gone up 27 percent since mid-December.

AAA, which monitors the nation's gas prices through daily feedback from more than 60,000 service stations across the United States, including an estimated 400 in Nevada, said its numbers also indicate an upward swing for gas prices in the United States.

Last May, the national average paid for one gallon of regular unleaded fuel was $1.72, according to AAA. By December, that figure had dipped to $1.11 before it again rose to $1.22 earlier this month.

"Prices are rising, but it's still not close to what we saw last spring," MacIntyre said.

Southern Nevada's gas prices have also gone up, said Lisa Foster, spokeswoman for AAA in Nevada. Following a 12-month low of $1.17 per gallon in mid-December, gas prices in the Las Vegas area have climbed in each subsequent month, according to AAA's monthly gas survey.

As recently as March 12, Las Vegas stations were charging an average of $1.29 per gallon. By Tuesday, that price had spiked to $1.37 per gallon, Foster said.

Foster said Las Vegas' gas prices have typically increased in early spring over the past few years as retailers pass on additional expenses associated from their switch to summer fuel blends, which cause less pollution but cost more to manufacture. That's a pattern she expects to continue in 2002, although she declined to speculate how much local gasoline costs could rise this summer.

Peter Krueger, state executive for the Nevada Petroleum Marketers Association, said some members of his association believe price hikes in Nevada could approach an additional 25 cents per gallon by mid-summer.

"From what my guys are telling me, I think we'll probably be back around $1.67 per gallon statewide by mid-summer," said Krueger, whose organization represents 83 independent gasoline wholesalers in the state.

Nevada's statewide average was $1.44 per gallon Tuesday, Foster said.

Although the use of most oil-related products dropped in the post Sept. 11 economic slump, MacIntyre said the demand for gasoline this winter grew by about 2 to 3 percent when compared to the winter of 2000-2001.

To meet that demand, oil refineries shifted parts of their production away from products like jet fuel in favor of gasoline, heating oil and kerosene products. As low gas prices and the revival of the airline industry both prompted increased demands on fuel production, however, last winter's extra bounty excesses were quickly exhausted.

"They were able to produce more gasoline this winter than they normally would, but with low gasoline prices, eventually demand started to exceed supply and you had to draw down inventory," MacIntyre said.

MacIntyre said the nation's gasoline inventory peaked the week of Feb. 8 at 217.4 million barrels. Over the next five weeks, inventory has steadily decreased, resulting in an inventory of 209.1 million barrels through the week of March 15.

One barrel of gasoline equals 42 gallons, MacIntyre said.

"That isn't an usually fast decline, but it's been very steady," MacIntyre said.