Gas Prices Highest Since 1991

Accelerating gasoline prices threaten to make this summer so expensive that even Charles Kuralt may stay home.

Driven by record demand and a shortfall in supply, pump prices have increased about 20 cents in the last month to their highest since the Persian Gulf War of 1991.

In an indication that prices will continue to rise, crude oil purchased for May delivery rose $1.15 to $24.21 a barrel Wednesday on the New York Mercantile Exchange, also the highest price in five years.

Experts predict no relief until August.

“I haven’t seen it this bad since the oil shortages” of the war, said Jim Redmon, general manager of Divine’s Inc., a Spokane fuel distributor. “We’re getting 2- to 3-cent hikes a day. It’s either going to have to stop, or there will be a negative public reaction and something will happen.”

It may have already begun. Redmon said consumption this week was down 20 percent at Divine’s six Cenex-brand stations. He attributes the change to higher prices passed on by the oil companies.

In the past month, regular unleaded has risen up to 21 cents per gallon at the 30 North Spokane self-service stations surveyed weekly by The Spokesman-Review’s North Voice. Prices Wednesday ranged from $1.19 to $1.26 per gallon, up from 98 cents to $1.13 per gallon on March 7.

Nationwide, the average price for all grades of gasoline is $1.29 a gallon, according to the U.S. Department of Energy’s annual summer gasoline outlook, which was released Wednesday.

That could rise as high as $1.35 by late spring or early summer, the government projects, before prices recede to as low as $1.23 in August.

Prices typically peak at the height of the summer travel season, but the annual run-up in prices started earlier than usual this year.

In the summer of 1995, the average price was only $1.24 a gallon.

Such trends are watched closely by the tourism industry.

Carolyn Ogden, tourism director at the Spokane Regional Convention and Visitors Bureau, said a spike in gas prices could put the brakes on leisure road travel, but that may be offset by an increasing number of airline travelers. Air travel at Spokane International Airport has exploded in the past three years.

“We’re not so much a rubber-tire community as we used to be,” she said.

Analysts blamed the gas price hikes on a combination of factors: too many drivers chasing too little available gasoline; disruption of production at some refineries; and public fear.

“We can sit back and watch this market soar,” analyst Tim Evans at the Pegasus Econometric Group told Bloomberg Business News. Pump prices, he added, are at their highest in five years.

The Energy Department said increased travel will boost demand by August to a record 8 million barrels of oil per day. That translates to U.S. drivers traveling more than 7 billion miles per day.

Gasoline inventories fell 1.85 million barrels to 201.8 million barrels last week, the American Petroleum Institute reported. It was the third weekly decline and gasoline stockpiles are now 5.4 percent below last year.

“The driving-age population is increasing and driving per capita is going up,” said Jay Hakes, administrator of information for the Energy Department.

So are the speed limits. The end of the federally mandated 55 mph speed limit could fuel greater consumption, though officials are uncertain how much. The federal speed limit originally was imposed as a means of saving energy during the oil embargo.

An unusually cold winter set the stage for tight oil supplies. But a series of mishaps and scheduled maintenance at several refineries slowed down production.

Shell Oil Co., Sun Co., Amoco Corp., Valero Refining Co., Star Enterprise and Mobil Corp. all shut down gasoline-making equipment during the past two weeks because of explosions, fires or for maintenance, according to Bloomberg Business News.

However, the Energy Department expects imported oil to ease pump prices later in the season.

“The world supply system is basically in good shape,” Hakes said.

, DataTimes The following fields overflowed: BYLINE = Grayden Jones Staff writer The Associated Press contributed to this report.