Gas prices spike on record oil costs

McALLEN — Consumers across the Rio Grande Valley are feeling the pinch at the pump this week after gasoline prices jumped to their highest since June.

Dozens of local gas stations pushed prices up to $2.99 a gallon for regular unleaded gasoline in recent days, up about 21 cents from just two weeks ago. Other stations are at $3.09.

Analysts and those that set gasoline prices blame the high prices on a variety of reasons, from speculation on Wall Street to a refinery explosion last week in Big Spring, near Midland.

“I think that, psychologically, people were just waiting for some kind of supply disruption,” said Craig Scotton, a spokesman for Stripes convenience stores, which is based in Corpus Christi.

“I think it will stay there until something is done to lessen concerns.”

The Big Spring refinery explosion on Feb. 18 has shut down that facility for up to six months and rocked the Texas market.

“That takes about 75,000 barrels of gasoline off the market every day,” Scotton said. “Demand is very tight.”

Scotton works in the pricing division for Stripes and helps determine the cost at the pump based on market demands.

Near-record oil prices have been the most significant reason for the increase in gasoline prices over the past couple years, Scotton said. About two-thirds of the cost of gas come from oil prices, according to the U.S. Energy Information Administration.

Just last week, the price of oil jumped above $100 a barrel, up about $11 from earlier in the month.

Oil traded for just more than $99 on Monday afternoon on the New York Mercantile Exchange. The national average for gasoline Monday was $3.13, according to the AAA Daily Fuel Gauge.

High prices now may not bode well for gas consumers heading into the summer months, Scotton said. Part of the reason he thinks oil is trading so high is because the industry is heading into the season where refineries shut down and change equipment from heating oil to gasoline production.

The gasoline market starts to see higher demand during the Spring Break season and Easter holiday weekend and peaks during the summer.

International demand and worries are helping to keep oil prices at their current record levels, said Ron Planting, an economist with the American Petroleum Institute, which is run by major oil companies.

Traders are also worried about the potential of OPEC cutting production next week, Planting said.

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Kyle Arnold covers business, the economy and general assignments for The Monitor. You can reach him at (956) 683-4410.