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American Morning

Gas Prices on the Rise

Aired August 31, 2001 - 11:45   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.
LEON HARRIS, CNN ANCHOR: One thing that's going up these days is gas prices, and of course just in time for Labor Day holiday travel.

The average price nationally for unleaded regular stands at $1.52 today. Yesterday, it was two pennies cheaper. A month ago, gas was going for $1.40. And a year ago, it was $1.51, about where it is right now.

Tom Kloza is in New York. He is with the Oil Price Information Service. And we thank you for your time this morning, because many of us were curious when we saw reports about gas prices leaping by as much as maybe 50 cents overnight in some parts of the country.

Are you aware of that?

TOM KLOZA, OIL PRICE INFORMATION SVC.: In the Midwest we've actually had prices go up by anywhere from 30 to 50 cents in the last couple of weeks or so. If you are unfortunate enough to be driving to Mt. Rushmore or somewhere like that this holiday weekend, you're going to be noticing prices close to $2 a gallon in some of those Midwestern states.

HARRIS: What's up with that? Because I know last time around, was it last summer we heard about this? Where they said it was the blend, the way that they had to blend certain formulas for certain regions, that that led to the high prices we went through last time around?

KLOZA: Yes, this time it has nothing to do with blends, and everything to do with location. We had pretty low gasoline stocks in the Midwest coming into August. And to add insult to injury, we had a couple of refinery events, one of them very, very serious, removing a Citgo refinery in the Chicago area. And prices exploded on the wholesale markets in the space of just about 10 days or so. And retail prices are catching up.

HARRIS: Well, hadn't the refineries kicked up their production, not even a few months ago?

KLOZA: Well, refiners actually were producing at record amounts in June and early July. Then after making as much as $20 a barrel on the gasoline they were manufacturing early in the summer, prices went to the point where they were actually manufacturing gasoline at cost. And a few of them tweaked production lower, and then you had a number of these refineries go down after running at very high rates for most of the summer.

And in the Midwest, you don't have access to the very cheap offshore gasoline like you do in some of the coastal markets, like the east coast, the Gulf coast, or even on the west coast. So the Midwest is the first one to feel the brunt of that.

HARRIS: Well, how long are they going to have to deal with that?

KLOZA: It's pretty much over in the Midwest right now, Leon. I think that wholesale prices have backed down by about 15 or 20 cents in the last few days, and I think the prices that you see in the great plains states and the great lakes states are going to be as high as what you see for the rest of the year.

The problem's going to shift to some other locations. We may have some belated increases on the east coast, and California is really a hot spot right now. California prices have zoomed again.

HARRIS: That's the last thing California needs.

KLOZA: It is the last thing they need, and they may survive. But right now, don't be surprised to see California street prices going up in increments of five or 10 cents a gallon soon.

HARRIS: So there's no conspiracy here? You know that's what sells cable and sells magazines. We need a conspiracy theory here.

KLOZA: There's no conspiracy. If there was a conspiracy, they were awful conspirators because prices actually were dropping before the July 4th weekend. It seems circumstantial, and it's coincidental that prices have actually been moving up right before Labor Day.

HARRIS: All right, you're the expert. We'll trust you on this one. Tom Kloza, thank you very much. We appreciate it.

KLOZA: Take care.

HARRIS: All right. You, too.

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