US gas prices spike; refinery problems cited

George Matkowski, of Mont­pe­lier, reaches into his wal­let to pay for gas, Fri­day, in Mont­pe­lier, Vt. A rise in the price of crude oil and prob­lems with refiner­ies and pipelines in the West Coast and Mid­west have caused prices at the pump to surge upward. (AP Photo/Toby Talbot)

JONATHAN FAHEY

AP Energy Writer

NEW YORK — A sur­prise surge in gaso­line prices is tak­ing some of the fun out of summer.

The national aver­age for a gal­lon of gas at the pump has climbed to $3.67, a rise of 34 cents since July 1. An increase in crude oil prices and prob­lems with refiner­ies and pipelines in the West Coast and Mid­west, includ­ing a fire in Cal­i­for­nia, are mostly to blame.

Ana­lysts don’t expect gas prices to get as high as they did in April, when 10 states passed $4 a gal­lon and the U.S. aver­age topped out at $3.94. But this is still unwel­come news in this slug­gish econ­omy, since any extra money that goes to fill gas tanks doesn’t get spent on movies and din­ners out.

The ris­ing prices could also put pres­sure on Pres­i­dent Barack Obama in the heat of his re-election campaign.

When Phil Van Schepen recently went to fill up his dry-cleaning deliv­ery van in Coon Rapids, Minn., he found a Post-it note a dri­ver before him had placed on the pump fault­ing Obama for high gaso­line prices.

“It’s a reminder of his energy poli­cies over­all, which I don’t agree with,” said Van Schepen, who buys about 100 gal­lons a week and finds he is spend­ing about $40 more than he did in early July. Still, he said the Post-it “was a bit much” because the pres­i­dent isn’t respon­si­ble for gaso­line prices.

Ana­lysts and econ­o­mists agree, say­ing prices for crude oil and whole­sale gaso­line are set on finan­cial exchanges around the world based on sup­ply and demand and expec­ta­tions about how those fac­tors may change.

The price at the pump in the U.S. fell more than 60 cents per gal­lon dur­ing the spring as the global econ­omy slowed and tur­moil in the Mid­dle East seemed to subside.

But crude oil is climb­ing again, ris­ing to $94 a bar­rel from a low of $78 in late June. Pro­duc­tion out­ages in South Sudan and the North Sea, West­ern sanc­tions that have cut the flow of Iran­ian oil, Iran’s threat to block tankers pass­ing through the vital Strait of Hor­muz, and fears that the vio­lence in Syria could esca­late into a wider regional con­flict have dri­ven up oil prices.

Sea­sonal fac­tors are also send­ing pump prices higher. Gas usu­ally costs more in the late spring and sum­mer because refin­ers have to make more expen­sive blends of gaso­line to meet clean air rules and because the sum­mer dri­ving sea­son boosts demand.

In the past few weeks, pipelines serv­ing Wis­con­sin and Illi­nois rup­tured, refiner­ies were shut down unex­pect­edly because of equip­ment prob­lems in Illi­nois and Indi­ana, and a blaze broke out at a refin­ery in Rich­mond, Calif.

Gaso­line prices shot up more than 50 cents in the span of a month in Indi­ana, Ver­mont, Illi­nois, Ohio, Ken­tucky, Michi­gan and Wis­con­sin. And Cal­i­for­nia dri­vers have seen gas climb 13 cents since the fire Mon­day. Motorists in many cities there are pay­ing well over $4.

Dri­vers in 20 states, includ­ing the pos­si­ble White House bat­tle­ground states of Col­orado, Iowa, Nevada, Ohio and Wis­con­sin, are pay­ing more for gaso­line this year than they did last year, and the list will prob­a­bly soon include Vir­ginia and North Car­olina, said Tom Kloza, chief oil ana­lyst at the Oil Price Infor­ma­tion Ser­vice. The national aver­age a year ago was $3.64.

“If you are pay­ing more than in the past, it does have the poten­tial to hurt the pres­i­dent,” Kloza said.

Econ­o­mists said the price bump prob­a­bly won’t have much of an effect on eco­nomic growth, at least not yet. The extra 34 cents a gal­lon trans­lates to $33 per month for a typ­i­cal household.

Prices could go higher if Mid­dle East ten­sions rise, more refin­ery prob­lems emerge or hur­ri­canes in the Gulf of Mex­ico force oil drillers or refin­ers to shut down. The National Oceanic and Atmos­pheric Admin­is­tra­tion this week said this could be a more active hur­ri­cane sea­son than pre­vi­ously thought.

But ana­lysts say that with­out those dis­rup­tions, gaso­line will prob­a­bly begin drop­ping after Labor Day as refin­ers switch to cheaper blends and dri­vers hit the road less often. That means vot­ers could be going to the polls as prices are falling.

Posted by AP News on Aug 12 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.