Colorado drivers can kiss goodbye any hopes of gasoline prices dropping below $2 a gallon – at least for now.
At the start of February, the average price of a gallon of regular unleaded gasoline was on the verge of falling below $2 in the metro area.
Near the end of February, the metro-area average – $2.29 a gallon Monday – is ready to break through $2.30, according to a AAA Colorado price survey.
With demand expected to spike in the summer, don’t expect the lower prices anytime soon, experts warn.
“It is very unlikely that gasoline prices will dip that low again, especially as we approach the driving season,” said Eric Escudero, a spokesman with AAA Colorado.
A 20 percent jump in crude oil prices, a refinery outage in Texas and the need to build stockpiles for the summer driving season are combining to drive prices up.
Retailers should be charging closer to $2.35 a gallon based on what wholesalers are charging them, said Roy Turner, executive vice president of the Colorado/Wyoming Petroleum Marketers and Convenience Store Association.
But vendors are willing to swallow losses so they don’t lose customers to competitors lucky enough to still have cheaper fuel in their tanks, he said.
Oil prices, the biggest component in the cost of gasoline, are moving higher for several reasons:
Tensions over Iran’s nuclear program have increased fears of a military conflict with one of the world’s top producers.
Colder weather along the East Coast has increased demand for heating oil.
Petroleum stockpiles built up last summer to deal with a hurricane season that ended up much milder than expected have been drawn down.
Crude-oil prices, in the $50-a-barrel range in late January, held above $61 a barrel Monday.
The closure of two refineries that supply Colorado hasn’t helped matters.
A fire shut down Valero Energy Corp.’s refinery in Sunray, Texas, on Feb. 16. It remains out of commission.
On Feb. 18, an electrical outage at Suncor Energy’s refinery in Commerce City cut two-thirds of production for almost two days.
Suncor, which provides about 30 percent of the state’s gasoline supplies, had enough emergency stockpiles to meet demand, said Steve Douglas, general manager of supply and marketing for Suncor.
“We are running full load and trying to ensure that we have the necessary inventories to meet demand as it ramps up,” Douglas said.
Refineries in March typically shut down to switch to summer blends of gasoline, which they must stockpile to meet demand.
About 30 percent more gasoline is purchased in Colorado during the summer than during the winter, a key reason prices are expected to rise, Douglas said.
Gasoline prices in Colorado – $2.33 a gallon of regular unleaded on Monday – remain below the national average, which was $2.35. Gasoline prices in the state are averaging levels last seen in mid-October.
Gasoline prices are lowest in Colorado Springs and metro Denver and highest in Vail and Glenwood Springs, Escudero said.
Rising prices at the pump probably will force consumers, who already outspend their disposable income each month, to cut spending elsewhere, said Tucker Hart Adams, an economist with U.S. Bank Colorado.
“As consumer spending falls in other areas – clothing, entertainment or travel, for example – companies will reduce employment, compounding the downturn,” Adams predicts.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
