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US

Gas prices up, but price fallback seen

gas prices
 

July 27, 1999
Web posted at: 2:48 p.m. EDT (1848 GMT)


In this story:

Supply down, demand up

Where to find highest, lowest gas prices

RELATED STORIES, SITES icon



ATLANTA (CNN) -- While the price of gasoline in recent days has gone up about a nickel a gallon -- less than a dollar per fill-up on many cars -- that may be the highest it will go all summer, analysts say.

The national average, including all grades and taxes, is currently about $1.27, up 5.18 cents from the previous survey conducted July 9, says Trilby Lundberg, publisher of the Lundberg Survey of 10,000 gas stations nationwide.

It is the highest price in more than 18 months and the biggest hike nationally since late March, according to the industry analyst. This comes after prices dropped significantly between early May and early June.

Pump prices are high compared with last year, but are comparable with prices in 1996 and 1997 during the same period, Lundberg said.

Supply down, demand up

Factors in the recent rise include:

  • Recovering Asian and Latin American economies that now require more energy.

  • A 2 million barrel a day production cut this spring by the Organization of the Petroleum Exporting Countries.

  • The traditional summer spike in miles driven by vacationers; more of those miles are being driven in bigger vehicles.

  • Problems, including fires, at several California refineries that have cut production

    Put it all together -- increased demand coupled with reduced production -- and you get higher prices, says economist Donald Ratajczak of Georgia State University.

    "Gas demand, which had been growing very slowly during the energy crisis of the '70s, now has started to kick back up again, and we're seeing demand grow 4 percent a year," he told CNN.

    Where to find highest, lowest gas prices

    Pump prices were rising throughout the country, Lundberg said, but most dramatically in the West.

    Northern California, for example, has the country's highest gasoline prices, averaging $1.63 per gallon. As much as 10 cents of that figure is due to refinery expenses for the production of extra-clean gas required to meet the state's strict emissions standards.

    In Atlanta, on the other hand, it's possible to fill up for less than a dollar a gallon. The state gas tax in Georgia is 14 cents a gallon, about half what it is in the rest of the country.

    Ratajczak expects higher gas prices nationwide to translate into a slight rise in the inflation rate, but there's also good news down the road.

    Analysts say prices are probably at their summer high point right now, and could begin to drop slightly by fall -- good news for drivers in a state famed for its freeways.

    "There's more of a mindset that this is a short-term situation," said Rob Schlichting, a spokesman for the California Energy Commission.

    Correspondent Dan Ronan contributed to this report, written by Jim Morris



    RELATED STORIES:
    U.S. gas prices hit recent high
    July 25, 1999
    Gas prices on rise
    June 27, 1999
    Gas prices going up, but bargains still to be found
    April 9, 1999

    RELATED SITES:
    U.S. Energy Information Administration
      • Energy Price Page
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