June 6, 2006

Retail gasoline prices rose in the last week, putting an end to the small declines that greeted motorists over the Memorial Day holiday, the Energy Department said Monday.

The U.S. average cost of self-serve regular gasoline rose 2.5 cents to $2.892 a gallon from the previous Monday, up nearly 78 cents compared with this time last year, according to the government's weekly survey of service stations. In California, the statewide average rose 0.3 cent to $3.269 a gallon, nearly 91 cents a gallon above the year-ago level.

In recent weeks, the U.S. average eked out an 8-cent-a-gallon losing streak and the California average dropped almost 7 cents a gallon, the survey showed.

The slow declines, followed by the higher prices this week, seem at odds with federal statistics that show gasoline imports are at record-high levels and fuel inventories are building as refineries boost production for the summer driving season.

Gasoline demand has stayed steady despite the high prices, but it is slightly lower than year-earlier levels, Energy Department figures indicate. And even though recent refinery glitches have cut into U.S. fuel production, analyst Stephen Schork said supplies were adequate.

"Short of another very hot summer like we had last year or another active hurricane season in the Gulf of Mexico, we could end up seeing gasoline prices trend lower through the end of summer," said Schork, editor of the Schork Report energy newsletter. "We have enough supply to meet demand."

Prices have declined on the Los Angeles spot gasoline market, where refiners and others buy and sell batches of fuel for immediate delivery. On Monday, the spot price was an estimated $2.44 a gallon, which indicates a retail price of $3.07 a gallon once taxes and delivery costs are added, based on figures from Oil Price Information Service.

The retail average in Los Angeles, however, was $3.321 a gallon Monday. In some cases, gas stations are lowering prices slowly to make up for money they lost when wholesale prices outpaced retail costs earlier this year. But statistics suggest refiners are the biggest beneficiaries.

The per-gallon margin for fuel producers here — which was 30 cents to 40 cents at the start of 2006 — exceeded $1 a gallon for three weeks in May before slipping to 94 cents a gallon for branded gasoline in the week ended May 29, the California Energy Commission estimated. The margin is the gross profit oil companies collect for their gasoline after subtracting marketing and distribution expenses and the cost of crude oil.

Crude oil futures for July delivery rose Monday as high as $73.84 a barrel as traders fretted over renewed threats from Iran to disrupt Middle East oil exports if the U.S. makes a "wrong move" in their nuclear dispute. Prices later pulled back to close at $72.60 a barrel, up 27 cents.