NEWS AND COMMENTARY
September 12, 2000
US Retail Gasoline Prices Rise By 6.5 Cents/Gal-Lundberg
By Dow Jones Newswires
Prices at The Pump Go Up, Up, Up! ... Weiss comments
CAMARILLO, CALIFORNIA - The price of gasoline in the United States rose more than 6.5 cents a gallon in the past two weeks as a result of soaring crude oil prices and tight supplies at U.S. refineries, an industry analyst said Sunday.
The weighted average for all grades of self-serve and full-serve gasoline was roughly $1.62 a gallon, an increase of nearly 30 cents from the same period a year ago, according to the Lundberg Survey of 10,000 U.S. service stations.
An agreement Sunday by OPEC to boost crude output by 800,000 barrels a day was expected to do little to ease rising pump prices. Members of the Organization of Petroleum Exporting Countries already are producing at least 700,000 barrels above their current quotas.
"Even if there were an increase of that magnitude, we should not expect an immediate domino effect on the street," said analyst Trilby Lundberg.
In Friday's survey, Atlanta had the lowest per-gallon average for self-serve regular at $1.3875. The highest price was in San Francisco at $1.9592 a gallon.
Detroit saw the largest increase over the two-week period, with prices rising 22.11 cents a gallon to $1.6331.
The largest decrease was in Billings, Mont., where prices fell 3.08 cents per gallon to $1.5609.
Despite higher prices, most dealers are not reaping the benefits, Lundberg said. The average dealer profit margin on self-serve regular hit a 15-month low of just more than 4 cents a gallon.
OPEC agreed to increase daily oil output by 800,000 barrels -- and the market responded by bidding up the price of crude to a 10-year high. This is the clearest sign yet that we're facing an energy crisis.
Expect gas prices to soar even higher in the coming weeks and months. Traders have no faith that the oil crunch will ease, and why should they? Oil inventories in the U.S. are well below last year's levels. Low inventories make U.S. consumers particularly vulnerable to spiking oil and gas prices. You can be sure that with the coming winter months, prices will spike even higher than they are now. This will put the economy under even more inflationary pressure.
Our winter forecast for the economy is chilling: There will come a day -- soon -- when $35 and even $40 a barrel for oil will be remembered as "The good old days when oil was cheap."