Pump Prices Climb as Refiners Scale Back Production

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Pump Prices Climb as Refiners Scale Back Production

NEW YORK -- Despite continued declining oil prices and amidst a recessionary economy, gas prices at the pump appear to be rising again.

The national average price for a gallon of regular gasoline climbed to $1.97, according to the Oil Price Information Service (OPIS) and AAA. That's up 22 percent since pump prices hit a five-year low of $1.61 on Dec. 30. Meanwhile, oil prices have fallen about 16 percent over that same period.

The reason for the increase was attributed to lower demand that caused oil refiners to scale back on gasoline production since late December, according to a report by USA Today. U.S. refineries were running at about 81.5 percent capacity as of Feb. 6, the lowest rate in 17 years -- not counting hurricane-related slowdowns, according to the Energy Information Administration (EIA). In comparison, they were running at 87.4 percent of capacity in early December, the report stated.

"If there's no demand … there's really not a whole lot of point to making extra gasoline," Bill Day, spokesman for Valero told USA Today. However, when other industries cut back due to lack of demand, consumers seldom notice.

Another reason for the disparity was that while the nation focuses on benchmark oil prices, such as Nymex, other types of crude, such as Brent or Maya, trade about $10-a-barrel higher, pointed out Tom Kloza, chief oil analyst for OPIS.

However, prices are not likely to rise to the $4-per-gallon level of last summer yet. Refiners are likely to increase production as their profit margins strengthen. Kloza predicted gas prices will head toward $2.50 a gallon through March. But they'll soon stabilize and drift down again, said another analyst.