Gas price rise not blamed on oil spill | The Wichita Eagle

Along with Cinco de Mayo, Mother's Day and Memorial Day, May brings higher gasoline prices at the pump as we creep toward summer.

And that's exactly what happened Tuesday in Wichita and across the country.

Regular unleaded gas averaged $2.80 a gallon in Wichita, for an increase of 6 cents over Monday, according to wichitagasprices.com.

The range was more dramatic, jumping 20 cents to Tuesday's high of $2.89 from the previous day's low of $2.69. Prices of $2.85 were routine for the area.

Nationally, gasoline prices averaged $2.93, a 7-cent jump from Monday.

A month ago, the average Wichita price was $2.71.

"This is a traditional time when it runs up," said Jim Haney, executive vice president for AAA in Kansas.

And, yes, $3 gasoline is still a strong possibility before the summer is over.

But the good news is prices will dip some — probably by the end of this week — before they resume their gradual climb.

Gasoline futures for June were "taking a beating" Tuesday, dropping 10 to 11 cents to the $2.30 to $2.35 range, said Darin Newsom, a senior market analyst for the Omaha-based Internet trading firm Telvent DTN.

The pump price for gasoline is usually 30 cents to 45 cents higher than the futures price, Newsom said.

"So by the end of the week we'll begin to see local cash prices come down a little bit as well," he said.

But he doesn't expect the drop to be more than 8 cents to 11 cents.

"It won't come off as fast as it went on," Newsom said. "It never does."

Gasoline prices closely follow the price of crude oil, which has been steadily climbing since Feb. 1. Like gasoline futures, West Texas crude dipped Tuesday, closing at $82.74 for a drop of $3.45 from Monday, according to Bloomberg.

What isn't affecting the pricing is the massive oil spill in the Gulf of Mexico.

Although the April 20 explosion at an exploratory drilling rig off the Louisiana coast has created serious environmental concerns, Haney said its effect on the market is "minimal."

"Because it was exploratory, the oil itself wasn't being immediately counted on in the market," he said.

There are some concerns that spill cleanup operations could slow the traffic lanes of ships bringing in imported oil.

But Haney said delays so far have been minor, and only 10 percent of the petroleum imported by the U.S. comes into the Louisiana Offshore Oil Port.

A drop in Tuesday's oil price indicates what the market thinks of the spill's effect.

"Traders don't seem to be all that excited about it," Newsom said. "We have plenty of crude oil, so it's not that it's going to cause a supply shortage."

U.S. refineries are operating at 89 percent capacity. Plus, gasoline inventories are close to a 17-year high, partially the result of low demand the past two years.

Talk of global economic recovery will fuel more travel and increase demand, the experts say.

"The first four months of the year have been extremely strong for us," Haney said. "People are buying more cruises, tours, travel plans."

That doesn't surprise Newsom.

"We're going to see driving season demand start to pick up," he said. "But will it be back to levels we've seen in years past, say, prior to 2007? No. We'll see seasonal demands but just not overwhelmingly strong demand."

Still, $3 gas is a possibility before demand slows down.

Considering futures prices could get to $2.55, Newsom said, "We could be talking about $2.95, possibly as high as $3."

But look on the bright side: If you lived in California, you would have paid $3.14 for a gallon of gas Tuesday.