NEW YORK -- Americans preparing for Thanksgiving travel face the highest gasoline prices in more than six months, with prices at the pump topping $3 per gallon in New York and on the West Coast, according to a report in the Wall Street Journal.
The average retail gasoline price was $2.89 a gallon on Nov. 15, the latest weekly reporting period, up almost three cents from the week before, according to the U.S. Energy Information Administration. At the end of August, drivers were paying 21 cents less a gallon, or $2.68.
Analysts blame the recent price increases [image-nocss] on temporary shutdowns at refineries in the United States and France, as well as on weakness in the dollar in early November, which led to higher oil prices.
They predict the cost of gasoline will stop rising or will fall by the end of the year, but they fear the relatively high prices could dampen the already sluggish pace of economic recovery, as consumers sacrifice a bigger portion of their paychecks to the fuel pump. This is an especially critical factor heading into the holiday shopping season, when many retailers ring up a large portion of their annual sales.
We will have to see how recent petroleum-price increases factor into consumer confidence and demand moving forward, John Felmy, chief economist for the American Petroleum Institute, told the newspaper.
A spate of refinery shutdowns around the world has contributed t o the increase of gasoline prices by reducing supply. Global supplies tightened because of strikes at the Mediterranean port of Fos-Lavera, the world's third-largest oil terminal, and at several French refineries.
In the U.S., maintenance on plants owned by ConocoPhillips, Hess Corp. and Sunoco Inc. temporarily cut output by about 800,000 barrels a day, or 5% of total U.S. capacity. The shutdowns led to gasoline inventories on the East Coast falling about 24% in the past two months.
Gasoline supplies should start increasing soon, however. Refiners looking to cash in on growing demand for heating oil and diesel fuel in the U.S. and Europe this winter will produce more gasoline, too, as a byproduct; that should boost inventories enough to freeze or lower prices by the end of the year, according to the report.
U.S. refiners could also restart capacity not now in use, said Bill Day, spokesman for Valero Energy, the largest independent U.S. refiner.
If inventories fall further, U.S. refineries have the capacity to quickly increase production, which should help moderate any price increases, he said.
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