Gasoline pump price relief nowhere in sight

Gasoline pump price relief nowhere in sight
By Chris Baltimore and Tom Doggett
Reuters News Service

WASHINGTON (Reuters) - Average U.S. gasoline pump prices -- already above $4 a gallon -- could run up 20 cents or more by mid-summer, if crude oil prices don't fall from record levels near $140 a barrel, analysts said.

Gasoline prices are up almost $1 from a year ago, heaping pressure on a U.S. economy beleaguered by falling home values, a sagging dollar and an anemic job market. Oil prices have risen six-fold in the past six years and are up 40 percent since January.

For the first time ever, average retail U.S. pump prices tracked by the Energy Information Administration rose above $4 a gallon on Monday to average $4.04, up 96 cents from a year ago. California prices averaged $4.43 a gallon.

There are more gasoline price increases lurking in the fuel delivery chain, especially if U.S. refiners are able to boost historically low profit margins and pass more of their soaring crude oil costs along to consumers.

"There is still a very big upside potential to gasoline prices, because refining margins are not anywhere near where they were a year ago," said Fadel Gheit, an analyst with Oppenheimer & Co.

"By the middle of July, if oil prices don't go lower, we are going to see another pop of at least 20 cents," Gheit said of gasoline retail prices.

U.S. crude settled up $10.75 at $138.54 a barrel on Friday, after touching an all-time high of $139.12, in its biggest gain in dollar terms on record. U.S. oil futures were lower on Monday at about $136.50 a barrel.

If Friday's jump were fully priced into retail gasoline prices, they would increase about 25 cents a gallon, Gheit said.

So far, that hasn't happened because low demand for gasoline, as well as a mandate for refiners to use corn-blended ethanol, has kept U.S. refining margins weak, he said.

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