Led by jumps at the pump in the Midwest and West, U.S. gasoline retail prices soared 5% to a record unadjusted high over the last two weeks, that could mean a costly summer for light-truck fleets. Analysts are even predicting the national average price at the pump could reach $3.00 by summer.
Overall, the average price increased $0.0858 to $1.76 a gallon over the last two weeks, according to the Lundberg Survey of 8,000 service stations nationwide. That price covered all grades of gasoline and taxes vs. the price as of April 20.
“The increase is not as great as it was in the prior period,” said analyst Trilby Lundberg. “That's because supplies are loosening up, so the big hikes are slowing.”
Adam Sieminski, an analyst for Deutsche Banc Alex Brown, said the price at the pump will hit $3 a gallon only if something goes “seriously wrong” with supplies. Even though refineries are operating at nearly 100% capacity, accidents like the April fire at a Los Angeles-area oil refinery could curtail supply and drive up prices.
Refineries are producing more gasoline as the busy summer driving season approaches, but the increase in production has yet to make a dent in prices. The oil industry contends prices haven't yet gone down because there is typically a two-week to three-week lag between increased production and lower prices at the pump.
The American Automobile Association (AAA) runs its own survey of more than 60,000 service stations and found the average retail price for regular gasoline jumped to $1.68 a gallon, which is $0.03 a gallon higher than the record reached last summer.
AAA said the prices show a need for a better national energy policy – and the suspension of some cleaner-burning fuel regulations should fuel shortages arise this summer.