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Gasoline Prices Have Skyrocketed in Recent Weeks

Aired March 25, 2002 - 12:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: Now, the last time you stopped for a fill-up, you might have done a double-take at what gasoline is costing now.

A respected energy analyst says the nationwide price of gas rose higher the past two weeks than in any two weeks on record.

The sudden spike, more than 14 cents a gallon.

Let's talk more about it. From Washington, Red Cavaney, President, CEO of the American Petroleum Institute.

Good afternoon, Red. Nice to see you.

RED CAVANEY, PRESIDENT & CEO, AMERICAN PETROLEUM INSTITUTE: Good afternoon.

HEMMER: The headline from this, 50 years the survey has been done. It's never jumped 14 cents in a two-week period.

Why? What are the factors at play here?

CAVANEY: Well, historically, the price of gasoline tracked very closely with the price of crude oil. And there are three things that are contributing to the increase in the price of crude oil.

Number one, the economic recovery is occurring a lot faster than most people expected. Demand is up in the United States for gasoline better than three percent, which is very, very aggressive.

Number two, OPEC has curtailed production in order to keep the price high.

And third, and probably an important intangible is there's a lot of anxiety over the Middle East. And the United States gets about 27 percent of its crude oil from the Middle East.

So, these factors have pushed up over the last several weeks the price of crude oil, and gasoline prices are responding accordingly.

HEMMER: With that Middle East equation, is Iraq involved in that, as well?

CAVANEY: It's the whole Middle East equation. It's very hard to predict exactly what's going to go on.

And I think all those variables are what's creating a nervousness, shall we say.

HEMMER: There's a silver lining there, though. If the economic picture is recovering more and more, the jobs picture looks better. As a result, we might be paying more, but in terms of long-term recovery, perhaps that is the silver lining of hope here.

CAVANEY: It's very much a silver lining. We must remember that whenever we're in an economic recession, you pay very low prices.

The price at the end of the year last year was about $1.07 per gallon of regular, which is near the historical low.

So as gasoline prices go up, they're still about 10 cents a gallon less than they were last year. And we are encouraged with the economic recovery and the more jobs.

HEMMER: Yeah. Red, what's the trend now in the near-term? Higher or a stabilization?

CAVANEY: It's hard to say, because crude oil is traded on worldwide markets, and it depends on the worldwide demand.

Earlier this month, the Department of Energy put out its short- term outlook. And there, they predicted slightly higher prices and possibly some volatility as we look forward.

You might recall that many of the problems we've had the last two summers and in springtime dealing with gasoline prices and the rapid swings, were a result of regulatory straightjackets.

And we've been working very hard with the energy legislation in Congress to see if we can't get some flexibility there, because that benefits the consumer greatly. And so, we're going to keep after that.

HEMMER: All right, Red, thanks. Red Cavaney live in Washington. Again, the price spike is there. Everybody can see it. Red, thank you.

CAVANEY: Thank you very much.

HEMMER: All right. Much appreciated.

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