Global Fears Drive Crude Oil, Gasoline Prices Upward

Energy speculators are driving prices up because of fears of military action against Iran, which could disrupt flow of oil, so far it has caused the average price in Salem to rise by 12-cents per gallon in one week, and 10-cents statewide.

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(SALEM) - Concerns about the nuclear standoff with Iran and violence in Nigeria that could hurt oil production drove crude oil prices to more than $69 a barrel Tuesday, says AAA`s Elliot Eki. At the same time, the U.S. Department of Energy released its seasonal outlook, projecting that regular gasoline will average $2.62 per gallon, barring any unexpected supply disruptions. Yet, the national average price already is up to $2.69, up 33-cents in the past month and 41-cents higher than one year ago.

In the past week, Oregon's statewide average price rose by 10-cents to $2.61 for regular gasoline; in the Salem metropolitan area, as well as Eugene-Springfield, the average prices went up by 12 cents per gallon in the same time period.

Increasing fuel consumption, high crude oil costs, low-sulfur requirements and demand for ethanol as a fuel additive are expected to keep consumer prices high during 2006. In addition, falling fuel inventories are putting upward pressure on pump prices.

Production levels at domestic refineries are still below normal. Some analysts say unless the refineries increase output and if crude oil prices remain at their current high levels, the cost of gasoline could rise by as much as 10-to-20 cents per gallon by the Memorial Day weekend. The energy market already is showing some nervousness about late summer weather and the potential for more hurricane damage and disruptions to fuel production and distribution.

"At this time, it's impossible to forecast how high fuel prices will go this summer," said AAA Public Affairs Director Elliott Eki. "Consumers can take some basic measures to stretch their energy dollars, such as driving their most fuel efficient vehicle, removing excess weight from the trunk, making sure tires are properly inflated, combining errands and shopping trips, slowing down and avoiding fast or sudden starts and stops." At $2.61, Oregon's average gasoline price ranks 13th lowest in the nation. Hawaii has the highest statewide average price at $2.97. California's is up to $2.86; Washington's rose to $2.70; Nevada's is $2.69; and Idaho's is $2.38. Utah has the lowest average price at $2.34. The national average diesel price rose eight cents to $2.73 per gallon. In California, diesel averages $3.01 per gallon; in Washington, it's $2.87; in Nevada it's up to $2.82; in Oregon, it rose to $2.79; and, in Idaho, it remained at $2.72.