On the rise again --Gasoline prices continue upward trend after 11 weeks of falling
John Sullivan June 17, 2003 Vehicles travel Monday along Interstate 49. As the vacation season begins, gas prices are climbing. LAFAYETTE The Advertiser—Gasoline prices have started a slow, but steady climb upwards again after falling for almost 11 straight weeks. And, this upswing is coming at the start of the summer vacation driving season, a time when demand is the heaviest on U.S. inventories. A spot check of five stations in Lafayette on Monday showed that the average price was $1.35 per gallon for regular unleaded; $1.43 for medium grade unleaded; and $1.49 for premium unleaded. “I haven’t changed my plans yet, but it could definitely affect them,” said Vicki Morgan of Broussard. “I think we will have to wait and see.” Morgan said her family usually takes a driving vacation during the summer. The rise comes on a forecast made by analysts with the federal Energy Information Agency on April 8 that motorists could expect little relief from high prices at the pumps this summer. In its report, the EIA, which is an agency of the U.S. Department of Energy, predicted that by mid-summer, the average price across the United States will be $1.56 per gallon for regular unleaded. According to its report, “The project price is 17 cents per gallon above last summer’s average, but close to average summer prices in 2000 and 2001.” The report said the high gasoline prices are being caused by high crude oil costs, low motor gasoline inventories and a growing domestic demand.” According to the agency and the American Petroleum Institute, gasoline inventories totaled 200 million barrels at the end of March, about 13 million barrels below last year’s total at the same time and 6 million barrels above the record low seen in 2001. EIA officials also cautioned that the supply and demand situation may not get better by the fall. According to its records, average domestic crude production in 2003 is expected to decrease by 66,000 barrels per day, or 1.1 percent, to a level of 5.75 million barrels of oil per day. For 2004, a 2.4 percent decrease is expected, resulting in an average yearly production rate of 5.61 million barrels of oil per day. Patrick Burke, an investment representative with the New Iberia office of Edward Jones, said the long-range forecast for oil calls for a price in the low- to mid-$20s per barrel. “Increased production from Russia and other non-OPEC areas may lead to lower oil prices, particularly if OPEC becomes unable to continue the production cuts that have been successful in supporting higher oil prices over the past three years,” Burke said. OPEC, the Organization of Petroleum Exporting Countries, has scheduled a meeting in September to discuss worldwide oil output. The 11-nation organization is made up of Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. Burke said crude oil prices averaged $25.96 in 2001, $26.12 in 2002 and, so far, $31.74 for 2003. “While we expect oil prices to stay below $30, supply concerns in Iraq, Nigeria and the lingering effects of the Venezuelan strike are keeping prices higher than expected,” Burke said. “The slowdown in world economic growth is lowering demand, and the combination of supply disruptions and uncertain growth are expected to keep prices volatile.” OPEC and demand-and-supply questions were the last thing that Gwen Sam said she was thinking about after hearing of gasoline prices beginning a slow climb upwards. “I guess I will do less traveling,” said Sam, a Lafayette resident. “It will affect me and my family. We may not travel much this year.” On the road The weekly U.S. retail gasoline prices for regular grade according to the Energy Information Agency: 5/26/03 6/2/03 6/9/03 East Coast: 1.442 1.437 1.442 West Coast: 1.699 1.677 1.657 Midwest: 1.471 1.449 1.506 Gulf Coast: 1.369 1.364 1.378 SOURCE: Energy Information Agency