U.S. gas prices set another record

Gary Gentile

Monday, Aug. 15, 2005 | 11:53 a.m.

LOS ANGELES -- Retail gas prices hit another record high over the past three weeks, mirroring a rapid increase in the cost of crude oil, according to a nationwide survey.

The average price for all three grades rose nearly 20 cents to $2.53 in the three weeks ending Aug. 12, said Trilby Lundberg, who publishes the semimonthly Lundberg Survey of 7,000 gas stations around the country. The figures were not adjusted for inflation.

In the same three-week period, crude oil price futures rose about $8.21. A barrel of oil produces about 42 gallons of gasoline, resulting in a price increase of 19.6 cents per gallon -- nearly identical to the 19.8 cent rise in the price of gas at the pumps, Lundberg said Sunday.

There was scant good news for consumers in the latest report.

Demand for gas will remain high through August, but should drop after Labor Day. Prices should soften after that assuming underlying crude oil prices hold stable and refinery activity and shipments aren't interrupted by natural disasters, such as major hurricanes, Lundberg said.

"Some price stability or some peak followed by price reductions does appear likely right now," she said.

Retail prices have risen an average of 70 cents since the beginning of the year and are up 62.7 cents from last August, Lundberg said.

Still, adjusted for inflation, prices have yet to climb to the record levels reached in the 1980s.

Gas prices in March 1981 would be $3.03 per gallon expressed in today's dollars, Lundberg said, while a barrel of oil would be about $90.

The rising prices have helped boost profits at oil companies. Chevron Corp.'s $18 billion acquisition of oil and gas company Unocal Corp. on Wednesday was predicated on the expectation that the price of crude oil would remain high or climb further, analysts said.

"I'm feeling it," said driver Adolfo Fernandez, a Los Angeles resident who was filling his BMW Sunday with premium unleaded at a cost of $2.97 per gallon. "I feel sorry for the people who really feel it and can't afford it."

"The prices are so ridiculous," added Danny Derosas of Los Angeles. "Everything you work for goes into gas."

According to the survey, self-serve regular averaged $2.50 a gallon nationwide. Midgrade was pegged at $2.59, with premium-grade was at $2.69.