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For 8th week in row, prices at pump rise

Colorado average for regular gas at $2.573 a gallon

Gargi Chakrabarty, Rocky Mountain News

Published March 27, 2007 at midnight

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Colorado's pump prices on Monday rose for the eighth week in a row, with nervous motorists bracing for more increases in the coming weeks.

The average statewide price for a gallon of regular unleaded gas hit $2.573, according to AAA Colorado, 3 cents above last week's level and nearly 30 cents higher than a month ago.

Prices for higher grades are 20 cents to 30 cents a gallon above the regular unleaded price.

And the rally could be gaining strength.

Crude oil - which accounts for the bulk of the gasoline price - rose Monday to briefly touch $63 a barrel at the New York Mercantile Exchange, highest in a year. It stayed above $60 a barrel for the sixth day in a row as tensions over oil producer Iran's capture of 15 British sailors at gunpoint on Friday roiled the crude market.

Also, gas supplies remain tight nationwide because of refinery problems, including a fire at a Valero refinery in Texas last month that cut pipeline supplies to Colorado. The switch from winter fuel blend to summer fuel blend also is crimping the available stock of gasoline.

"Looking at a crystal ball, I'd say pump prices in Colorado would reach a high point before Memorial Day, somewhere between $2.80 and $2.90 a gallon," said Bryant Gimlin, energy risk manager at Fort Lupton-based Gray Oil Co., a wholesale distributor of gasoline and diesel. "I'd say $3 a gallon is possible if we have another major refinery problem or tensions escalate in Iran."

The wholesale price of gasoline in Colorado rose 7 cents a gallon on Monday. That's actually below the rate of increase in recent weeks, when the price jumped 10 cents a week during late February and early March.

Pump prices are below record levels. When adjusted for inflation, the highest U.S. average retail gasoline price was $3.079 a gallon in March 1981, the Energy Information Administration said. Colorado came close to that mark on Aug. 11, 2006, when it hit $3.076.

On Monday, the national average for gasoline stood at $2.581.

Colorado's two oil refineries in Commerce City are running at full capacity, said Steve Douglas, general manager of marketing at Suncor Energy (USA).

Suncor owns both refineries, which supply about 35 percent of the state's demand. The company also sells gasoline retail through its 43 Phillips 66 stations across the state.

Douglas said one of the refining units sustained a brief outage last week, but that did not interrupt fuel supplies.

Typically, pump prices rise before Memorial Day, the beginning of the driving season in the U.S. Unplanned refinery issues are adding to the volatility of prices, Douglas explained.

"I think $3 gallon is always possible," he said. "We are going to be running the refineries at full capacity through summer to ensure the market is well-supplied."

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