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Gasoline Prices Still Rising

LOS ANGELES – Drivers took a hit at the pumps, the Energy Department said, as gasoline continued its unusual September climb in most of the nation and U.S. diesel prices topped $3 a gallon for the first time in more than a year.

by Staff
September 28, 2007
3 min to read


LOS ANGELES – Drivers took a hit at the pumps, the Energy Department said, as gasoline continued its unusual September climb in most of the nation and U.S. diesel prices topped $3 a gallon for the first time in more than a year, according to the Los Angeles Times newspaper.

The average price of a gallon of self-serve regular gasoline in California rose 5.7 cents to $2.961, which was 20.1 cents above the year-earlier price, according to the Energy Department's weekly survey of filling stations. Nationally, gasoline rose 2.5 cents to $2.812 a gallon. That was 43.4 cents above the price in the same period a year earlier.

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The average price for a gallon of diesel fuel rose 6.8 cents to $3.032, the Energy Department said. That was 43.7 cents above the year-earlier price and the highest since diesel hit $3.033 in August 2006. California diesel rose 7 cents to $3.093, the highest in seven weeks.

The fuel price increase comes after oil surged above $80 a barrel nearly two weeks ago on supply concerns. In addition, inventories of refined products, including gasoline and diesel, have been unusually low, according to the Times.

“Refineries have been playing catch-up on gasoline supplies. We have been focused on gas stocks all summer and rightly so, but diesel supplies are well below normal compared to a year ago,” said Phil Flynn, senior market analyst for Alaron Trading Corp. in Chicago.

Independent long-haul truck drivers are among those feeling the most pain. On a one-way contract to deliver a load of garage doors from Farmington, Conn., to West Covina last week, trucker Lee Klaus said, he spent $1,498 on diesel for his 1999 “Condo” Freightliner, including a fill-up at a Mobil station near Ontario Mills Mall for $3.49 a gallon. Both were record-high costs for Klaus, who said his average coast-to-coast job pays him about $3,000 before expenses.

After Hurricane Katrina in 2005, “diesel prices went from painful to excruciating,” said Klaus, 60, who lives in Portland, Ore., when he isn't hauling cargo. “Now, it's gone from excruciating to nearly unbearable.”

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But there may be little relief soon. Unlike gasoline demand, which typically slows at this time of year, diesel demand is heading for its yearly peak as retailers gather goods for the holiday shopping season.

“This is the preseason rally for diesel, like what we see in the spring for gasoline, so it's not uncommon to see diesel going up this time of year,” said Fred Rozell, director of retail pricing for the Oil Price Information Service (OPIS) in New Jersey, who added that the dollar's falling value has made imported fuel more expensive.

Crude oil fell 67 cents to $80.95 a barrel Sept. 24 on the New York Mercantile Exchange after another tropical storm false alarm.

Some experts were talking about a coming correction in the price of crude of as much as $20 a barrel. They said the market would find fewer and fewer reasons to stay about $80 a barrel in the absence of actual events, such as a direct hit on petroleum equipment in the Gulf of Mexico.

“This is a commodity stretched to the limit by speculation, by the fear premium embedded in this oil price. I do not see a support for oil a cent above $60,” said Fadel Gheit, senior energy analyst for Oppenheimer & Co. “Oil cannot say inflated forever and the fundamentals will win out.”

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