U.S. gasoline prices rise to almost $3.32/gallon

New York Apr 6, 2008; Sinead Carew writing for Reuters reported that the average price for a gallon of gasoline in the United States rose 5.26 cents to a record high in the last two weeks, and an industry analyst said retail prices would keep rising amid refinery cost increases.

The national average for self-serve, regular gas was $3.3171 a gallon on April 4, according to the nationwide Lundberg survey of about 7,000 gas stations. This was 53 cents higher than a year ago and compares to a March 21 record of $3.2645.

Survey editor Trilby Lundberg said prices would keep rising along with crude oil and ethanol prices as refiners pass on the costs of mandated spring reformulations of gasoline.

"The essential causes are strong crude oil prices, dramatically higher ethanol prices and seasonally rising gasoline demand," without any year-to-date gasoline demand growth compared with last year, Lundberg said.

To comply with federal environmental protection regulations refiners have to reformulate gasoline by using more ethanol, which has itself been rising in price, Lundberg said, noting that more ethanol than ever is required this year.

As a result, she estimated that it would "take a substantial drop in the price of crude for gasoline prices to fail to jump up from here" as refiners absorb these costs.

"It's too early to tell now whether the gasoline market will shrink this year or fail to grow, but one thing sure is that it will not see the kind of growth that would help refiners and retailers suppress price hikes," Lundberg said.

This means pump price will rise faster going forward.

"These added costs will come to the pump increasingly and I think that gasoline price increases will be speeding up from here," she added. "It's safe to say that these prices have arrested demand growth but won't stop the seasonal rise in gasoline consumption which occurs every year."

At $3.72 a gallon, San Francisco had the highest average price for self-serve, regular unleaded gas, while the lowest price was $3.03 a gallon in Newark, New Jersey, even though self-service is banned in New Jersey, Lundberg said.

Editing for Reuters by Maureen Bavdek