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.

High gasoline prices expected all summer

-- Ain't Gonna Happen (Not Here Not@ever.com), May 15, 2000

Answers

Like a tidal wave inflation will smash into the shores of this nations economy crippleing "long term" investors from wall street to silicon valley.

1.54 a gallon 87 octane

-- Swampthing (in@the.swamp), May 15, 2000.

$1.69 a gallon in Milwaukee, up from $1.38 three weeks ago.

-- Wisconsin (gas price is@skyrocketing.com), May 15, 2000.

$1.42 for 87 octane in NW Piedmont area of No. Carolina.

Check out the American Stock Exchange's oil/gas index: $XOI, now nearing 530 from a 'low' after the March gas price runup of about 450. This portends even worse stuff coming down the road at us.

-- (Cyber@Squat.com), May 15, 2000.

$1.56 for reg unleaded here in Ohio today

-- consumer (shh@aol.com), May 15, 2000.

NYMEX crude surges

http://biz.yahoo.com/rf/000515/hq.html

-- - (x@xxx.com), May 15, 2000.

Monday May 15, 1:39 pm Eastern Time

NYMEX crude surges above $30/bbl as mogas hits new peaks

NEW YORK, May 15 (Reuters) - NYMEX crude oil futures soared above $30 a barrel in a bout of fresh buying in afternoon trade on Monday as gasoline futures raced to new contract highs.

NYMEX June crude traded as high as $30.04 at 1:08 p.m (1708 GMT), the highest in more than two months and extending the day's gains to 42 cents.

June gasoline trade roared to another contract high of 97.50 cents a gallon, stretching its gains to 3.46 cents on the day.

Traders said concerns over refinery outages, underlined by a glitch at Equilon Enterprises' (quote from Yahoo! UK & Ireland: SHEL.L) (NYSE:TX - news) benzene unit at its Wood River, Ill., refinery were fuelling gasoline's rise.

``The Wood River benzene unit's outage is having an impact on gasoline because its output is used as a blending component for gasoline,'' said Thomas Blakeslee, an analyst at Energy Merchants in Bel-Air, Maryland.

But Blakeslee and other traders said that NYMEX crude at above $30 may be unsustainable, with an OPEC meeting just five weeks away.

``Technicians are advising caution that the market is already a bit on the high side,'' Blakeslee noted.

Earlier, Mexican Energy Minister Luis Tellez said on Monday that oil producing nations are in agreement to raise crude oil output in September if necessary.

Tellez reiterated that OPEC and independent producers, like Mexico, are not likely to decide on an output increase at a June 21 summit in Vienna because more oil ``is not necessary'' for the moment.

On Friday, U.S. Energy Secretary Bill Richardson raised concern over crude oil hitting $30 on the NYMEX and urged producers to consider increasing output at the June meeting.

OPEC President Ali Rodriguez said Sunday it was to early to discuss production and on Monday he said he did not at the moment see an inclination among oil producers to increase supply.

-- - (x@xxx.com), May 15, 2000.