Watch out: Here comes $4 gasoline

Prices were supposed to peak below $3 a gallon, but refinery problems, strong demand could push them much higher.

NEW YORK (CNNMoney.com) Gasoline prices, already above $3 a gallon in some states, could charge higher this summer and hit $4 a gallon in some locations, according to one industry expert.

Pump prices were supposed to peak below $3 a gallon this May, then drop off before the summer driving season got into full swing, according to the Energy Department’s price forecast.

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Well, we’re not even out of April yet, and the nationwide average price for a gallon of unleaded regular has hit $2.87.

Behind high gas prices: The refinery crunch
One big factor driving prices: gasoline inventories continue to fall. After a promising one-week boost in refining activity, the latest report Wednesday actually shows refining activity falling. And demand is already soaring, before the summer driving season is in full swing.

What this means for prices is obvious, and to most drivers it is not good news.

“More and more communities are going to see gasoline that approaches or exceeds $4 a gallon,” said John Kilduff, an energy analyst at Man Financial in New York. “Where we’re currently at with prices, that’s a given.”

While geopolitical tensions have driven up the cost of crude oil, which accounts for about half the cost of a gallon of gas, refinery problems here in the United States are largely to blame for the price jump.

Five states – California, Hawaii, Oregon, Washington and Nevada – already have average prices above $3 a gallon, according to the motorist organization AAA. In California, the average price of gas has reached $3.35 a gallon.

Kilduff said it will be in those states, and possibly New England and the northern Midwest, where prices have the best chance of hitting $4 a gallon, mostly as a result of localized refinery problems.

And he thinks prices will have no trouble breaking the old non-inflation-adjusted record of $3.057 a gallon, hit in 2005 just after Hurricane Katrina.

Up, up and …
Retail gas prices have been climbing steadily as one refinery outage after another crimped production and U.S. drivers consumed ever more in spite of rising prices.

By early this week, retail prices had risen 32 percent since the start of the year, according to the Lundberg Survey.

And the Energy Information Administration said Wednesday that gasoline supplies, which have fallen 13 percent since early February, were “well below the lower end of the average range.”

Moreover, EIA reported refinery utilization fell, with refineries running at only 87.8 percent of capacity last week.

Traders had been watching that number, and gasoline future prices fell sharply last week, when refinery activity jumped for first time in several weeks.

But Tuesday’s refining news caused gasoline futures to spike more than 5 cents a gallon to $2.27, their highest price since last August, lessening the chances retail prices will fall anytime soon.

An EIA analyst, who forecast a high of $2.87 just two weeks ago, couldn’t say if the agency’s next forecast, due out May 8, will be revised higher, although it seems likely.

“Obviously, April is not progressing as we had hoped,” said EIA economist Tancred Lidderdale. “We’re continually humbled by the market.”

You know Baby Boomers…when we had the hurricanes down here [Florida]. we were all told to suck it in and deal with it…no water, power for large amounts of time…even food was low…

But it amazed me when the electric companies went to war for more money to compensate for the extra money, to make up for their loses. AND they got it!

What about all the money they made off of us thru the years and still…why didn’t they have to tighten their belts the way the rest of us did.

I see this gas increase as the same.

I worked for an oil company, in Houston. And I once asked them how can they charge so much for their gas…they are the highest company out there charging the public…the reply was given with a smirk and it was “BECAUSE WE CAN!”

There you have it Baby Boomers…

I never buy gas on Mondays! I know I am only one person…but I know that if we all didn’t buy gas on Monday as a retaliation against these prices…we could make an impact and be heard…how do you think they would react, if no one went to the pumps on Mondays!

Granted they would sit behind their desks and laugh at us…but I say hit them where it hurts the most and that is in their money grubbing, greedy, over pricing pockets…

They are having huge profits, the best ever…and we the American public are footing the bill.

Baby Boomers you are the majority! MAKE them hear us…
drive less…car pool…get autos with energy savers or HYDRIDS…stomp your feet more! NO GAS ON MONDAY!

Make them start the week off badly…believe me when I say those bar graphs wouln’t lie! Make the stock holders take notice…raise your fists to gas prices! Tell your friends…spread it around…BE HEARD!

PS…how many gas taxes do you think the government will come up with, this year…ask California…! They will tell you!

******GAS WAR******

~The Baby Boomer Queen~