Gasoline rose nearly 1 1/2 cents a gallon at the pump in the last two weeks because refineries raised prices to wholesalers, an oil industry analyst said Sunday.
The price of all grades of gasoline nationwide increased to 87.51 cents from Aug. 8 to Aug. 22, said Jan Lundberg, editor and publisher of the Lundberg Letter, a weekly analysis of the world oil market.
Lundberg's survey of 16,000 gas stations nationwide found self-service regular unleaded costing an average 79.9 cents a gallon and full-service premium at an average $1.19.3.
"In the short term, we have retail continuing to go up a little," Los Angeles-based Lundberg said. "That will continue for at least a little while."
The price increase at the pumps has its origin at the refinery level, where prices for gasoline sold to wholesalers went up 3 and two-thirds cents, he said.
Cheap Foreign Crude
Cheap crude still pours into U.S. refineries from the foreign oil market, but wholesalers generated extra demand and the price increase as they moved to fill their inventories with cheap fuel, he said.
Meanwhile, the retailer's profit margin has fallen by 2 cents since Aug. 8 because increased competition on the street has held back increases at the pump.
"Even the increased summer gasoline sales did not allow for hefty price increases at the pump," Lundberg said. Nationwide summer consumption figures are not available, he said, adding that California sales were up 5%.
But Lundberg said refineries eventually would have to reverse the trend of increasing their prices as wholesalers reach capacity.
Refineries are operating at 85% capacity to move out as much of the cheap foreign crude as possible, he said.