Gasoline prices crept up 2 cents a gallon Tuesday to $1.31 at some stations in the Salt Lake area, marking the beginning of expected widespread increases this week, industry officials predict.
Retailers have held prices at $1.27-$1.29 a gallon the past two weeks in the face of rising wholesale gasoline costs nibbling at a 2-4 cent profit margin. The rise in wholesale gasoline prices has reflected record increases in crude oil.Midday Tuesday, the spot price for West Texas Intermediate was $38.75 a barrel. It approached $40 a barrel on Monday.
"There is not doubt the price has to go up. I expect it to be around $1.33-$1.37 a gallon by the end of the week," said Paul Ashton, Utah County service station owner and executive director of the Utah Petroleum Retailers Association.
"And I think we have the right to raise it," he added.
Salt Lake's average price of unleaded regular fuel is 9-10 cents lower per gallon than other metropolitan markets in the country, said Brent Lowe, regional marketing manager for Chevron U.S.A. Surveys say the average price around the country is $1.39 a gallon.
He also predicted pump prices can go nowhere but up as retailers pass on the full effect of a doubling in the price of world crude oil prices.
Wholesale gasoline prices have moved up 1 cent to a half cent per gallon over the past two weeks. On Monday wholesale gasoline moved up another penny to about 95 cents a gallon, not including taxes and freight.
Some experts have pointed out throughout the latest crisis that gasoline prices nationwide, not just in Utah, have not kept up with the rise in crude.
"Forty dollars for crude oil is up about $20 from where it was before all this unpleasantness got started," said Philip L. Dodge, an analyst with Nomura Securities International Inc.
"That $20 increase is about 48 cents per gallon, and so far, the price of gasoline is only up about half of that. It eventually could go up another 25 cents."
But even those prices would not be as expensive, in inflation-adjusted terms, as they were in 1980 when oil hit $40 a barrel.
Oil would have to hit about $57 per barrel in 1990 dollars to equal the real cost of oil from a decade earlier, Dodge said.