Gas prices at the pump exceed post-Katrina record

News staff and wire reports

Monday, May 14, 2007

Gasoline prices hit a new record at the pump on Monday, but traders sent oil and gasoline futures prices in different directions as they weighed mixed news from overseas.

The average national price of a gallon of gas hit $3.073 on Monday, up almost a penny from Sunday's also record-setting price. Gasoline is now well above the previous record of $3.057, set on Sept. 5, 2005, soon after Hurricane Katrina hit.

Gasoline prices in Colorado Monday were higher than they have ever been — just before the busy Memorial Day weekend. And they aren't expected to drop anytime soon.

Tight supplies, caused by refinery troubles and low inventories led to the gasoline price jump in Colorado and Denver.



Colorado's average for regular unleaded rose about 2 cents over the weekend, to $3.233 a gallon, Colorado AAA reported. Before this recent rally, the last time it set a record was in Aug. 11, when the price stood at $3.076. Denver's price, too, reached a record Monday at $3.201.

Chip Hodge, energy portfolio manager at John Hancock Financial Securities, in Boston, thinks gasoline futures traders may be reacting psychologically to the fact that gas prices at the pump are setting new records.

"You just get a feeling that $3 a gallon ... it's got to have an impact from a demand standpoint," Hodge said. "So, maybe there's a little bit of a selloff on those pressures."

While oil prices were higher on the day, they were well off their earlier highs on news that Chevron Corp. plans to restart a

42,000 barrels-per-day Nigerian oil facility, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

"There was good news out of Nigeria after a lot of bad news," Flynn said. "They're pumping oil again."

But that good news was tempered by new reports of refinery outages, including a fire at a large Preem facility in Sweden, and a quickly resolved problem at a Valero Energy Corp. refinery in Texas last week.

"Any refinery problems anywhere on the globe now adds to concerns" that gasoline supplies won't be adequate to meet peak summer driving demand, Flynn said.

The summer driving season begins in two weeks, on Memorial Day.

The government reported that gasoline inventories rose slightly last week, but remain low by historic standards.

"Tightness in the U.S. gasoline situation will continue to drive the market ... because the summer driving season is right around the corner," said Victor Shum, energy analyst with Purvin & Gertz in Singapore. "There's not a lot of time for refineries to catch up with demand."