Crude-oil prices rose to a record high Tuesday, yet motorists are enjoying an uncharacteristic break in fuel costs.
Oil and gasoline prices typically move in concert, with increases in crude usually reflected soon at the pump.
But Colorado’s average gasoline price of $3.03 a gallon Tuesday was down 9 percent since late May. In the same period, the price of crude oil has increased 22 percent.
Light, sweet crude for September delivery rose $1.38 to settle at $78.21 a barrel Tuesday on the New York Mercantile Exchange. That wiped out the former record closing price of $77.03 set July 14, 2006, and came close to the record intraday high of $78.40 reached the same day.
Analysts said increases in oil prices have been offset by ample gasoline supplies – aided by the gradual return to full production of several refineries that had been shut for maintenance.
Retail gasoline prices could continue to drop over the next month, at least until demand spikes toward the Labor Day holiday weekend, said Bryant Gimlin, a petroleum analyst for Fort Lupton- based Gray Oil Co.
“We ought to see retail prices start to come down a little more” because of ample supplies, Gimlin said.
Increases in crude prices over the past three months have been driven more by speculators than by supply- and-demand fundamentals, he said.
Speculation about the potential for oil disruptions from terrorism, military conflict and hurricanes has helped drive the rise in crude prices, analysts said.
“Speculators are betting there will be a supply crunch,” Gimlin said. “I happen to disagree, because there’s a whole lot of crude out there.”
Gasoline prices have been brought down partly because refiners are making lower profits than earlier this year, said John Kingston, director of oil for energy-information firm Platts.
“Refining (profit) margins were insanely high during the spring when so much refining capacity was down,” he said. “What’s going on now is actually more a return to the norm.”
Gross profit margins at the nation’s refineries hit an all-time high of $37.48 a barrel, or nearly $1 a gallon, in May. Margins now hover near $11 a barrel.
Some analysts, however, believe the market can’t continue to withstand the pressure of record crude-oil costs.
AAA Colorado spokesman Eric Escudero said motorists should prepare for the possibility of higher gasoline prices this summer.
“Historically, high oil prices do not make things look good for gasoline prices,” he said. “Gas prices have been very volatile this year, and this break that we’ve had with prices near $3 could be short-lived.”
Staff writer Steve Raabe can be reached at 303-954-1948 or sraabe@denverpost.com.
