High gasoline prices expected all summer

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High gasoline prices expected all summer OPEC production isn't boosting supply Source: The Kansas City Star Publication date: 2000-05-13

Gasoline prices are back up, and they're likely to stay there with summer vacations just ahead. By now the full effect of OPEC's decision in March to sell more crude oil was supposed to have brought gas prices down. In fact, prices in the Kansas City area fell an average of nearly 20 cents per gallon for unleaded gas in the month following the announcement.

But prices this week rose to an average of $1.40 cents per gallon - just 4 cents under the year's high. And with the heavy travel season just beginning, the prices could go even higher.

"I don't like the looks of this at all," said Mike Right, a spokesman for AAA Auto Club of Missouri.

Gas prices also have jumped nationwide. According to AAA's weekly surveys, the price of gasoline in the Kansas City area has gone up 16 cents per gallon since April 28 to $1.40. Motorists in St. Louis, who have to use reformulated gasoline because of air quality, are now paying $1.49 a gallon.

And any relief in the near future appears unlikely, especially with OPEC recently announcing that they didn't intend to make any additional production increases.

"There are some ominous signs on the horizon," Right said.

When OPEC announced in March it would increase output, the question was when - and not if - motorists would get some relief from higher prices. Initially, prices declined. But it didn't last long.

Prices for crude oil are now hovering at $30 per barrel on the New York Mercantile Exchange, which is near their highs for the year.

What happened? The federal Energy Information Administration said OPEC's increased output is insufficient to build stockpiles of gasoline through the third quarter of the year. That means low inventories and little cushion to meet any unexpected demand.

"We're still seeing low (gasoline) stockpiles," said Tancred Lidderdale, a refinery industry analyst for the Energy Information Administration.

One result is that oil markets have become increasingly skittish.When the International Energy Agency reported Thursday that it was worried supplies could not keep up with demand by the end of the year, the price of crude oil went up $1 a barrel.

Longer term, the Energy Information Administration sees further declines in gas prices. But don't hold your breath. That will come in 2001, according to the agency's energy forecast.

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=10488534&ID=cnniw&scategory=Energy%3AOil

-- Martin Thompson (mthom1927@aol.com), May 14, 2000

Answers

What would we do without this site? It keeps us up with what's going on more than any other.

-- LillyLP (lillyLP@aol.com), May 15, 2000.

What I can't figure out is how come OPEC didn't deliver more oil in Apri, after they upped their quotas. Only Iraq, exported much more, and that's because they had enormous quantities on the ground from their three-week boycott of shipments in December. What's going on?

-- Billiver (billiver@aol.com), May 15, 2000.

And, Iraq is still screaming for spare parts, saying they can't keep up big shipments without them.

There's a lot more going on here, in oil, than meets the eye.

-- Uncle Fred (dogboy45@bigfoot.com), May 15, 2000.


The looming oil crises goes even further than than. Indonesia' output is falling due to the infrastructure collapsing all around them. What's Japan going to do? That's where they get most of their oil.

-- Wellesley (wellesley@freeport.net), May 15, 2000.

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