With gasoline prices breaching $2 a gallon the past two weeks, there’s little doubt that drivers will pay dearly to cruise around in their cars this summer.
"There is zero relief in sight," said Tim Hamilton, executive director of the nonprofit Automotive United Trades Organization, a group of 500 convenience store and gas stations in Washington state.
Hamilton said prices at or above $2.50 a gallon are possible by the end of summer.
The average price for a gallon of regular unleaded was just under $2.14 in the Seattle-Bellevue-Everett area Friday, according to AAA. That was more than 2 cents higher than the day before and 45 cents above the average a year ago.
All this, and it’s still three weeks before the Memorial Day weekend, the traditional start of the summer driving season.
"I’m calling it uncharted territory," said Janet Ray, a spokeswoman at the regional AAA office in Bellevue. "Every day in the past 10 days or so, we’ve been hitting a new record."
Around Snohomish and Island counties, it’s easy to spot prices above the average. In Lake Stevens, prices for regular unleaded have hit $2.20 or more at some stations. In Clinton on Whidbey Island, at least one station had regular unleaded at $2.24 a gallon this week.
Keeping track of how much fuel prices rise always is easier than explaining why they rise. But higher demand for oil, especially from the United States and China, and turmoil in the Middle East are receiving some of the blame.
Then there’s the refinery factor, which could get worse later this year. In a report released Friday, the state Attorney General’s Office said refinery capacity on the West Coast isn’t keeping up with the region’s growth.
"Increased demand and limited production capacity have become normal, leaving no room for error in the supply system," the report said.
While Washington’s refineries have improved their production during the past decade, four refineries in California have shut down. A fifth, a Shell refinery in Bakersfield, is scheduled to shut down by October.
That will probably result in more gasoline refined in Washington being shipped to California, where prices are higher, according to the state report. In turn, prices here will rise as well.
Assistant attorney general Don Irby said state officials are concerned about the closure of the Bakersfield refinery, though there is little they can do about it.
"At this point in time, I’m really not sure how that’s going to turn out," he said.
Meanwhile, Ray said industry experts have told her that refineries are running at or near capacity.
"The feeling is that in the next couple of weeks the supply might catch up a little more," she said.
But that may not be enough to reverse climbing prices.
The cost of crude oil on the New York Mercantile Exchange rose above $40 a barrel on Friday for the first time since Iraq invaded Kuwait in 1990. It closed at $39.93 a barrel.
U.S. gasoline futures also closed at a record $1.335 a gallon.
As that record was being set, ExxonMobil reported its first quarter results, including record earnings of more than $5 billion.
Hamilton, whose group represents independent service stations, said motorists probably will have to wait a while before prices drop back below $2. How high does he think they’ll go?
"It will depend on consumption, declines and on whether or not we have any refinery problems," he said. "If the refineries keep running at near full capacity and consumption goes up just a little bit or stays the same, we should be around $2.20 to $2.25."
If there’s a problem — which is more likely when refineries are running at capacity — or some other event, Hamilton said drivers could see prices at or above $2.50 a gallon before the summer ends.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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