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Gas Prices Expected to Rise

NEW YORK -- The days of $1-a-gallon gasoline are all but gone, and there's a chance the gas might be, too, at midyear.

"Every summer this decade, there is the possibility of a shortage. And it increases every year," said Tom Kloza, analyst at Oil Price Information Service (OPIS).

That's because oil companies can't refine or import as much gasoline as Americans are likely as the economy improves. And weak refineries will close instead of spending on overhauls to produce low-sulfur gas the federal government is requiring, cutting gas supplies, according to USA Today.

Premcor Inc. just yesterday said it would close its Hartford, Ill. refinery rather than pay for the costly upgrades required to produce low-sulfur fuel.

Gas consumption could peak at 9.5 million barrels a day in June or July if use patterns follow the strong trend reported last week. The 158 U.S. refineries can pump out about 8.5 million barrels a day, Kloza says, and the difference can't be made up with imports. ''You can't import boutique fuels,'' he says of summer blends required in some areas to reduce air pollution or support local industries.

Kloza doesn't predict shortages, only cautions that they are more likely as rising demands are placed on the already fragile U.S. fuel supply network.

OPIS retail analyst Fred Rozell says gas prices could fall, briefly, as refineries unload winter-blend gas they must stop selling by the end of this month. Winter and summer blends are required to meet anti-pollution standards during cold and warm weather, when gas blends behave differently.
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