Gasoline prices reached record highs Monday in Colorado and several Front Range cities as demand for fuel remained strong and supplies tight.
Energy analysts said increasing gas production by refineries should help increase supplies and offer some short- term relief from high costs.
But they also said prices might once again hit uncharted levels during peak summer driving periods.
Colorado’s average price Monday for self-service regular was $3.09, topping the previous record of $3.08 set in August, according to AAA.
The average for Denver was a record $3.06. New highs also were reached in Boulder, Colorado Springs, Fort Collins, Longmont, Loveland and Pueblo.
“Pump prices should start coming down after this week,” said Brian Milne, an analyst with Omaha-based energy information service DTN.
“Right now, we’re seeing a short- term peak, and then I think prices will start flattening out,” he said. “But after that, there’s a very good chance of prices rising higher as summer-season demand peaks.”
Prices in Colorado are at a record because of a fire at a Texas refinery that supplies 17 percent of Colorado’s gasoline, as well as crude-oil prices that climbed from about $50 a barrel in January to as high as $66.70 last month.
However, analysts said two indicators point toward a short- term drop in gas prices: lower costs for crude oil and a corresponding decline in gasoline futures, which typically precede changes at the retail level.
Crude oil for June delivery fell 46 cents, to $61.47 a barrel, on the New York Mercantile Exchange, the lowest close since March 21.
Gasoline for June delivery in New York declined 2.68 cents, to $2.19 a gallon. That’s a sharp drop from the futures price of $2.46 a gallon on April 30.
While those factors should lead to relief from record pump prices within the next few days or weeks, motorists should not get too comfortable, said economist Jason Schenker of Wachovia Corp.
A relatively strong national economy and increases in personal income mean that demand for fuel will stay strong, keeping upward pressure on prices, he said.
“You’ve got more people making more money, and that means more SUVs and trucks on the road,” Schenker said. “The cost of gasoline is of secondary importance. “I think that $3.25 gas is very feasible this summer, and I would not be surprised to see $3.50 at some point.”
In a report released Monday, the U.S. Energy Information Administration said the national average for regular gas is $3.05, shy of the record $3.07 reached in September 2005 after Hurricane Katrina.
The nation’s highest-priced market was California, with an average of $3.46, according to the EIA.
The lowest prices, averaging $2.87 a gallon, were in Gulf Coast states.
Gas prices will go higher this summer, and the degree will depend largely on the potential of supply disruptions from geopolitical uprisings and hurricanes, said analyst James DiGeorgia of the Gold and Energy Advisor newsletter.
With only a moderate level of supply problems, pump prices could hit $3.50 by July, he said. More serious disruptions could send prices soaring to $4 or higher.
“Four dollars for regular gasoline will become an everyday reality within the next few years,” DiGeorgia said. “We need to be bracing for that.”
Staff writer Steve Raabe can be reached at 303-954-1948 or sraabe@denverpost.com.
