The increase in demand also comes, at least initially, when refineries are changing over from winter to summer blends of fuel, which also restricts supplies and therefore increases prices.

"All of the tanks have to be emptied completely before the new grades can be put into those tanks, and it causes some supply issues," Peacock says.

An Energy Information Administration study says, "Good weather and vacations cause U.S. summer gasoline demand to average about 5 percent higher than during the rest of the year. If crude oil prices remain unchanged, gasoline prices would typically increase by 10-20 cents from January to the summer."

Fuel taxes

Much of what consumers pay for gasoline goes for taxes. The federal government charges 18.4 cents a gallon. Utah charges an additional 24.5 cents — for a total of 42.9 cents a gallon in tax.

As of Jan. 24, Utah's gasoline taxes were 13th highest among the 50 states, according to the American Petroleum Institute.

The highest in the nation were in New York — where federal and state taxes are a combined 64.2 cents a gallon. The lowest were in Alaska, where combined taxes were only 26.4 cents a gallon.

"Motor fuel taxes have not been increased in Utah since 1997. At that time, we were in the upper tier of the tax range for state taxes, but since then . . . we have migrated down (as others rose) toward the middle of the pack," Peacock said.

The outlook

Everyone (except maybe some price villains) is hurt when the price of gasoline is high.

As a Senate Permanent Subcommittee on Investigations probe wrote, "Gasoline price increases can disrupt the entire U.S. economy. By increasing the cost of transportation, increases in the price of gasoline affect the costs of all goods and services."

High prices are expected to remain for the foreseeable future.

Energy Secretary Samuel Bodman said three weeks ago, "The suppliers have lost control of the market. Demand exceeds supply. . . . Clearly, we're going to have a number of years — two to three years — before suppliers are in a position to meet the needs of demands."

Still, the U.S. Energy Information Administration said last month that it does not believe prices for regular gasoline will average $3 a gallon for the year. Why?

"First, a larger-than-normal amount of refinery capacity is currently off line" because of damage from Hurricane Katrina. "Hopefully, as these refineries return to full operation, gasoline production should increase, thus adding much-needed supply."

It also said, "While geopolitical concerns are likely to remain for the time being, at some point, inventories may be built sufficiently to provide enough of a hedge for some refiners, which could help halt the rise in crude oil prices."

---

E-mail: lee@desnews.com