Another Retail Gasoline Price Record
Now it's up to Katrina, says Lundberg
CAMARILLO, Calif. -- Retail gasoline prices jumped 12.62 cents in the past two weeks, to a U.S. average $2.6273 for regular grade, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations. It is the fourth record peak this year.
The price remains well below the true inflation adjusted price of 1981, which is one reason that gasoline demand has been able to grow (more than 1% in August over August 2004).
Recently, wholesale gasoline price hikes [image-nocss] exceeded those of crude; it is likely that in addition to demand growth, refining sector attention to new upcoming stresses including costly preparation for lower sulfur in gasoline and diesel and higher higher use of ethanol (all hitting in 2006) are taking place. Joining those lower sulfur costs are this month's energy bill, requiring more ethanol sales while denying safe harbor from methyl tertiary butyl ether (MTBE) lawsuits, to add to potential future gasoline cost.
Oil prices hit another all-time record on August 26. If oil prices are stable from here, with no hit to world supply, then unfolding new refining costs allowing, gasoline prices are likely to peak and then edge downward as seasonal declines in demand take hold. September always shows lower demand than August does, and might do even more so this year because of record prices. Labor Day driving itself might contribute to an extra-large demand dropoff, since vacation driving has more price elasticity than commute driving does.
The opposite results, higher oil prices and further pump price hikes, will take place if Hurricane Katrina causes Ivan-force damage to oil facilities and supply.