Expect return of gas pump shock
Tight supplies are expected to again force up consumer prices.
Published March 5, 2005
WASHINGTON - With the petroleum industry pumping just barely enough fuel to keep the world's economic engine humming, a buying frenzy on oil markets is setting the stage for sharply higher gasoline prices as early as next week.
Crude oil futures traded above $53 a barrel again on Friday, and analysts said the global supply tightness is likely to persist through 2005 because of an economic expansion that appears only moderately slower than the year before. But the cycle of rising incomes and ever higher energy prices won't last forever.
"Those people who think we've entered a new paradigm where high oil prices don't affect economic growth are wrong," said Lawrence Goldstein, president of the Petroleum Industry Research Foundation in New York.
What's happening today, Goldstein said, is that the blistering pace of economic growth in China, and to a lesser degree the United States, is overshadowing the financial drag that typically would be more prominent when energy prices soar. "Right now we're riding a wonderful cycle," he said.
Indeed, reports released this week showed that most of the big retail chains posted strong sales gains in February, work force productivity is rising, manufacturing is expanding and the U.S. economy added a better-than-expected 262,000 jobs last month.
But for many drivers, it soon will be difficult to find gas stations across America selling regular unleaded for less than $2 a gallon, analysts said. That's because gasoline prices on futures markets have soared 20 percent in the past week.
The average retail price of gasoline was $1.93 per gallon last week, a 21 cent increase from a year ago, according to the Energy Department.
In the Tampa-St. Petersburg-Clearwater market, the average price of a gallon of unleaded gas was $1.883 Friday, according to AAA's daily fuel gauge report.
That's up sharply from the year-ago price of $1.678 a gallon.
"I have already heard from gasoline retailers that new shipments are costing them a dime more (per gallon)," said Peter Beutel, president of Cameron Hanover Inc., a provider of petroleum market analysis. "By next week prices will be 10 to 15 cents higher at the pump in many places."
Times staff writer Jeff Harrington contributed to this report.
[Last modified March 5, 2005, 00:41:15]
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