Transcripts

Rising Gas Prices May Cool the Summer Driving Season

SUSIE GHARIB: The bad news today for drivers, AAA said gasoline prices hit an all-time high, $3.22 a gallon. It comes just two days before the Memorial Day holiday weekend. Crude and gasoline prices also rose at the New York Mercantile Exchange, despite a new government report showing that supplies rose over the past week. July crude futures closed at $65.77 a barrel, up $0.26. Suzanne Pratt reports.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Today of all days, oil and gasoline futures should have traded lower. After all the government reported domestic energy supplies increased again in the past week. Closely watched stockpiles of gas added 1.5 million barrels, while inventories of crude and distillate fuels also rose. U.S. refineries ran at more than 91 percent of capacity, up from the previous week. But today the market fixated on increased tensions in the Middle East, particularly news that U.S. naval ships were moving closer to Iran following a report that country is ramping up its nuclear program. GRZ energy trader Tony Grisanti says geopolitical worries are still a big factor in the market.

ANTHONY GRISANTI, OIL TRADER, GRZ ENERGY: Right after these numbers came out, we had news that Iran is enriching uranium at a much greater pace than what they said before. So that kind of negated any bearishness in this market.

PRATT: Maintenance problems and accidents at U.S. refineries have been a catalyst for higher gas prices this spring. On top of that, U.S. consumption is at an all-time high. But Oppenheimer analyst Fadel Gheit says it's unfair to blame big oil companies for surging gas prices.

FADEL GHEIT, OIL AND GAS ANALYST, OPPENHEIMER & CO.: It's a commodity that's dictated by the marketplace, supply and demand. If we think that gasoline prices are high, we can shop around for cheaper gas. People are not doing that or you can drive less and people are not doing that.

PRATT: According to AAA, since May 4, the average price for a gallon of gas has been above $3. In the last month, it has jumped 13 percent. Many experts predict prices will climb higher during the busy summer driving season. But others do not expect a supply shortage and predict prices will soon stabilize.

GHEIT: Unless we have an unusual number of refineries taken offline, I do believe that we have seen or we are very close to the high for gasoline prices probably this year. Next year is another game.

PRATT: Even with gas at record levels, AAA is forecasting a record number of Americans will take to the road this holiday weekend. So much for high gas prices crimping consumption. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.