Gasoline Prices at Record High -AAA

reuters.com Mon March 17, 2003 01:42 PM ET By Richard Valdmanis

NEW YORK (Reuters) - U.S. gasoline prices are at all-time highs at the pumps due to thin supplies and fears that a war on Iraq could disrupt oil shipments from the Middle East, the American Automobile Association (AAA) said on Monday.

Retail gasoline prices are roughly 50 cents a gallon higher than they were a year ago, the AAA said.

Energy experts say they expect prices to continue higher as spring weather tempts drivers back onto the roads and boosts demand during a time of war -- a situation that could threaten a U.S. economic recovery by cutting discretionary spending.

The American Petroleum Institute (API), which represents a number of big U.S. oil companies, has said that the surge in retail gasoline prices can be justified by a dramatic rise in the cost of crude oil as dealers fret over potential supply woes in the event of war.

But the price boom has again raised concern over potential price-gouging by retailers, with a group of Midwest lawmakers already calling for stringent monitoring of pump prices to ensure fair pricing.

The average price of regular unleaded gasoline hit a record $1.719 a gallon on March 15, with prices breaching the $2 mark in a number of major cities, according to the AAA's latest survey of more than 60,000 self-serve stations.

Crude oil futures prices were hovering around $35 a barrel Monday, up about 35 percent in four months as tensions rose between Washington and Baghdad and amid supply disruptions from OPEC-member Venezuela due to a national strike there.

In a sign that an attack on Iraq is nearing, the United States, Britain and Spain on Monday ended diplomatic efforts to win U.N. approval for an ultimatum to Iraq, paving the way for war. United Nations weapons inspectors were withdrawn.

President Bush will demand in a speech to the American people on Monday night that President Saddam Hussein leave Iraq to avoid an attack, a White House spokesman said.

The AAA, the nation's largest automobile and travel association, said in a statement last week that motorists should avoid "panic buying" in the event of a U.S. invasion of Iraq because it has "the potential of causing needless fuel shortages in local areas."