LOS ANGELES -- That all-too-familiar fear is back: Already high gas prices could soon skyrocket even higher. As crude oil prices spiked at nearly $64 a barrel Monday and ultimately settled at an all-time high of $63.94, industry experts and consumers were left wondering what's in store at the pump, according to a report in the Whittier Daily News.
The short answer is, it might get worse before it gets better.
"We've already seen $3 a gallon for regular at a station in Malibu and at a couple of other stations in San Francisco," [image-nocss] Jack Kyser, senior vice president and chief economist for the Los Angeles County Economic Development Corp., told the newspaper. "It all depends on what happens at our refineries. The ones in California are running at a very high level, and a major outage at one of the refineries could bump prices up to around $3 a gallon."
Monday's spike in oil prices was tied to several factors, including the market's persistent uneasiness about strong demand, tight supplies and a slew of threats to output around the globe.
The average nationwide price for regular unleaded gasoline is $2.34 a gallon, or 46 cents above last year, according to the Oil Price Information Service of Wall, N.J. Still, government data show that gasoline consumption is up almost 1% at 9.1 million barrels a day through July, compared with last year.
Rayola Dougher, a manager for general market issues with the American Petroleum Institute, said current market conditions are so tight that even the slightest event can trigger price spikes. "Over the weekend, the threats of attacks against U.S. buildings in Saudi Arabia and refinery glitches were the two main things that moved the market the most," she said.
And when oil prices rise, so do gasoline prices. In fact, every $1-per-barrel rise in the cost of oil equates to a 2.4 cent hike at the gas pump, Dougher said.
"We're producing record amounts of gasoline and importing record amounts of gas, but at the same time, our inventories are slightly below last year," she said. "The West Coast gasoline inventory is about 1.4% below what it was at this time last year."
Kyser said California is in dire need of more oil refineries to boost gasoline production. "We haven't added any major oil-refinery capacity since 1969," he said. "The problem is no one wants a refinery in their back yard. And even with all these employee discounts, people will still buy the SUVs and big Dodge trucks."