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To: George Burdell who wrote (13282)	8/6/2003 10:55:05 PM
From: Silver_Bullet	Read Replies (1) \| Respond to of 48461

High energy prices, in part, led us to the last recession. Starting again but from a higher price point this time? FT Pinch Could Boost Gasoline Prices Late Vacationers Hit the Road, Boosting Demand for Gas as Supplies Start to Fall By SUSAN WARREN Staff Reporter of THE WALL STREET JOURNAL A squeeze in gasoline supplies at the end of the summer driving season could mean higher prices at the pump for consumers hitting the road for a late vacation. Gasoline demand, which was relatively slow at the beginning of the cool and soggy summer, has picked up just as supplies are dropping, according to data released Wednesday by the U.S. Department of Energy's Energy Information Administration. That means gasoline prices may continue to climb through the Labor Day holiday. "This year you have to expect a late rush to the beach with all the pent-up demand from the earlier rainy spring season," says John Cook, director of the EIA's petroleum division. But this is also the time of the year that refineries typically begin to shift production to fuels like heating oil for the winter season, pulling back on gasoline production. Meanwhile, stubbornly high crude oil prices aren't expected to ease much through the end of the year and are helping to sustain steep gasoline prices, experts say. The U.S. imports gasoline to supplement domestic production. But with imports down 5% in the week ended Aug. 1 from the previous week, supplies could remain tight. Last week, gasoline inventories, which are held by refiners and other industry players, were drained below the normal range for this time of year, dropping by 2.7 million barrels to 201.8 million barrels. At the same time, demand for gasoline has been edging upward in recent weeks, say EIA analysts. "That's going to pressure gasoline prices up a bit," said Mr. Cook -- perhaps by a nickel a gallon on wholesale markets. At the pump, prices rose for the fourth time in five weeks this past week, with the U.S. average retail price for regular gasoline up two cents to $1.54 a gallon as of Aug. 4, according to the EIA. That's 14 cents a gallon higher than a year ago, and about a nickel higher than at the start of summer. But it is still far less than the $1.73 average price in March as the U.S. began a war with Iraq. Once the summer driving season passes, the EIA expects prices to slide 10 or 15 cents a gallon as demand slacks off after Labor Day. Crude-oil prices have hovered near $30 a barrel in recent months, propped up by low U.S. inventories, uncertainties over the resumption of Iraqi oil exports, and the careful calibration of production among members of the Organization of Petroleum Exporting Countries. The U.S. benchmark crude price fell 52 cents to $31.70 a barrel Wednesday on the New York Mercantile Exchange. Wednesday's data from the EIA showed an improvement, with stronger crude imports helping to push U.S. oil inventories up by 2.9 million barrels to 280.2 million barrels. But this is still 24.1 million barrels below year-earlier levels. Despite the high oil prices, OPEC ministers last week continued to fret over the possibility of too much oil on world markets by year end, as Iraq production grows and non-OPEC oil producers increase output. "Add it all up, and [U.S.] inventories are likely to build pretty quick," says Jamal Qureshi, an energy-market analyst for PFC Energy consultants. Even so, PFC's forecast calls for oil prices to stay relatively high through the end of the year, with an average price for the fourth quarter of $27.50 for West Texas Intermediate crude. A quicker resumption of Iraqi production to its prewar level of 2.5 million barrels a day could tip the market and drive prices down by early next year. OPEC ministers have cited this possibility as justification to consider cutting back the cartel's own production when they next meet in Vienna in Sept. 24.