CHICAGO — Summer vacations are just around the corner, and once again soaring gasoline prices are driving some motorists around the bend.
U.S. pump prices have hit record highs, topping the $2-a-gallon mark in Chicago and California and spurring talk of a possible $3 a gallon sometime after the peak driving season begins on Memorial Day.
“This is price gouging,” complained Jacquie Van Keuren, filling up at a San Francisco gas station after paying as much as $2.64 a gallon on a weekend trip to Los Angeles.
The odds appear to be against $3 gas, according to one industry analyst.
That would happen “only if something goes seriously wrong” with supplies, said Adam Sieminski of Deutsche Banc Alex Brown.
But even where prices are now, consumers are having unhappy flashbacks to last year when prices also climbed more than $2 a gallon.
“It’s ridiculous,” Cedric Norwood said Monday as he fueled up in downtown Chicago. “The oil companies are going to suck us dry.”
A recent Federal Trade Commission report on last summer’s price run-up found no evidence of oil industry collusion, and no blame has yet been laid for this year’s increase, which is tied to tight supplies. U.S. motorists still pay far less than their counterparts in Europe and Asia.
Nonetheless, pump rage is in full blossom as prices hit unprecedented levels – especially in smog-prone parts of the Midwest and West which are required to use cleaner, “reformulated” gasoline in summer. Recent fires at Tosco refineries in Los Angeles and Wood River, Ill., threatened those supplies and sent prices surging.
U.S. gas prices reached an all-time high in the past two weeks, not adjusting for inflation, according to the Lundberg Survey of 8,000 service stations. Overall, the average price covering all grades of gasoline increased 8.58 cents to $1.76 a gallon as of May 4.
Factoring in inflation, that’s a full dollar less than the average cost of gasoline in March 1981.
But don’t tell that to drivers in Chicago, which has the nation’s most expensive gasoline.
“This is crazy – $2.34 for a gallon of gas?” said Erika Trujillo, 19, who only partially filled her Nissan Stanza.
“We can’t even afford to pump gas anymore. We’re going to have to get on our bicycles.”
Even the White House alluded Monday to the possibility of $3-a-gallon gas.
White House spokesman Ari Fleischer said President Bush has not supported calls to repeal or cut the 18.4 cents-a-gallon federal gas tax and won’t act even if prices exceed that amount.
“Price controls will make the prices go higher and make people wait in lines,” Fleischer said.
U.S. refineries are being pushed to the limit to try to keep up with demand, and aging infrastructure has resulted in several breakdowns – no new U.S. refinery has been built in 15 years.
But there are hopeful signs in the most recent oil industry data, which showed gasoline supplies creeping higher.
“The worst may already be over because refiners are getting caught up” with supplies, said Phil Flynn, senior energy analyst for Alaron Trading Corp. in Chicago.
“The bad news for consumers is we don’t have one extra drop of gas to fall back on.
“If one more refinery goes out of service, it could have an impact on consumers of as much as 75 cents a gallon.”