Gas Prices Spike to Record High

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Gas Prices Spike to Record High

NEW YORK -- With barrels of oil trading at record prices yesterday, the average retail price of a gallon of regular grade gasoline continued it unprecedented climb frustrating consumers coast-to-coast.

According to the nationwide Lundberg survey of about 7,000 gas stations, the U.S. average retail regular gasoline price rose to $3.7929 a gallon on May 16, up nearly 17 cents in the past two weeks.

Survey Editor Trilby Lundberg told Reuters that the two hardest hit areas were Chicago and New York's Long Island where prices averaged average of more than $4 a gallon for the first time, a reality likely to hit all states in the coming months.

"The refinery margin on gasoline is so poor, I think the upward pressure on the refining margin will push up the price at the pump, even if crude oil does not," Lundberg told Reuters.

Refiners processing crude oil into gasoline have faced equally tight margins as consumer demand dropped for the first time in 17 years. Exxon Mobil Corp. chief executive Rex Tillerson told NBC's "Today" program last Thursday, "We're already seeing some demand slackening in gasoline demand in terms of miles driven," Tillerson said. "So I think we're very near, if we're not already at, the price where people clearly are altering their daily behavior."

Lundberg said prices will rise -- as they do every year -- in the months of June, July and August. "We will be consuming all that domestic refiners can produce, and what we cannot (consume), we will be importing from other countries during summer demand."

Tillerson told NBC news that it's plausible that prices could drop if consumption rates are significantly decreased. "It could be gradual, it could be very dramatic. And if you look back in the past history when we've had rapid run-ups in prices like we've had, oftentimes the corrections are fairly dramatic."