What's Behind the Rise in Gas Prices?

Gasoline prices have started to climb above $3 a gallon. What's behind the jump? Higher crude oil prices and refineries that are struggling to keep up with demand.


The Energy Department comes out today with its weekly report on gas prices, but most drivers don't need to see a report to know the painful truth. The average price of gas nationwide has topped $3 a gallon.

NPR's Scott Horsley reports.

SCOTT HORSLEY: Gasoline prices have soared more than 80 cents a gallon in just over three months, adding about $12 to the cost of a typical fill-up. Crude oil prices account for less than half that increase. Most of the extra money motorists are paying at the pump is going to the refiners who turn crude oil into gasoline. Energy analyst Philip Verleger says refineries have had trouble this year keeping up with demand.

Mr. PHILIP VERLEGER (Energy Analyst, Council on Foreign Relations): What we have in the gasoline market right now is a inability of refineries to make enough gasoline. Every refinery in the country - in the world for that matter -seems to have experienced one type of maintenance problem or another this year, and so that production is well below where it should be.

HORSLEY: As a result of those refinery problems, the Energy Department says gasoline stockpiles are well below average for this time of year, with the busy summer driving season still to come. While oil refiners are slowly fixing their problems, AAA spokesman Jeff Sundstrom is nervous about what the next few weeks may bring.

Mr. JEFF SUNDSTROM (Spokesman, AAA): Unfortunately, AAA believes that it's very possible that we will set a new record high price before the end of this month - that would be a price in excess of $3.07 per gallon.

HORSLEY: Even with the high prices, demand for gas keeps climbing. In recent weeks, demand is up about 1 and a half percent from this time last year.

Scott Horsley, NPR News.

Copyright © 2007 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.



Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.