CAMARILLO, Calif. -- Self-serve regular gasoline hit $3.0117, up 38.44 cents a gallon in the past two weeks, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations.
Adjusted for inflation, it has finally exceeded the prior all-time high of March 1981, which was about $3.00 gallon in today's dollars.
But prices are already abating. The affected pipelines are back, and about half the hurricane-affected refining capacity is back, and imported [image-nocss] gasoline is pouring in. Wholesale gasoline prices are climbing down fast in response to supply's comeback, and can be expected to continue falling unless crude prices rise.
Besides improving supply, the reason that wholesale gasoline can be expected to continue dropping is that demand, always lower in September, itself took a hit and will be weaker due to overall higher retail prices and due to lower or zero demand in hurricane-damaged areas.
There is a good chance that crude prices will not rise to prevent that, even though the world's crude oil demand is greater in winter months, because the world is responding to higher crude oil prices by slowing its demand growth.
What high oil prices are doing to demand around the world has yet to unfold.
Meanwhile, retail and refiner margins, for those not disabled or affected by Hurricane Katrina, are swollen widefor the moment. High prices during a supply emergency are part of the solution, rather than the problem, since allocation of supply by price inhibits demand, prevents panic buying and minimizes outages. Accusations of gasoline retailer gouging consumers, and notions for a government fix to high prices, are wrong-headed.
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