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Gasoline set to surge
Pump prices could shoot up about 25 cents a gallon over next few weeks to record high: analysts.
March 4, 2005: 3:11 PM EST

NEW YORK (CNN/Money) - Gasoline costs are set to rise sharply to record levels soon, energy analysts said Friday.

Prices at the pump will jump 12 cents a gallon early next week and another 12 cents by the end of the month, said Peter Beutel, president of energy tracking firm Cameron Hanover.

"Right away, nationwide, we're going to see an increase of gas prices of 12 cents," Beutel said. "We'll see it almost everywhere by Tuesday. In addition, sometime between St. Patrick's Day and the end of the month, I expect to see an additional 12 cents. This is extraordinarily bad news for the consumer."

Beutel said he isn't using a crystal ball, but monitoring wholesale gas prices, which closed at $1.5075 a gallon on Thursday up 50 cents since Christmas, according to the Oil Price Information Service. Higher retail prices are sure to follow as gas stations scramble to keep up, he said.

"I'm not forecasting these changes," said Beutel, adding that an increase of 1 cent a gallon costs consumers $38 million a day nationwide. "These changes have already occurred at the wholesale level."

Beutel said the increases are driven as oil prices rise, due to growing demand from China, India and other developing countries, as well as maintenance costs at aging American refineries, among other reasons.

An increase of 24 cents a gallon would put the average retail price of a gallon of regular unleaded at nearly $2.17 a gallon, according to the Energy Information Administration, the statistical arm of the Energy Department. An EIA survey Monday put the average price at $1.928, up 2.3 cents from a week earlier.

Gas prices last hit a record $2.06 a gallon for regular unleaded in May, according to the EIA.

Oil prices struck $55.20 a barrel in trading Thursday, near record highs, but have retreated since. Gasoline futures set a record at $1.5450 a gallon.

Tom Kloza, senior analyst at the Oil Price Information Service, agrees that gasoline will hit record highs but perhaps not until later this month, he said, adding the national average could still top $2 within a week.

The rise in prices "may even take Martha (Stewart) off the front page for a while," he joked.

Kloza said there is nothing that can be done to stop the increase, short of discovering "dilithium crystals," the fictional fuel source used to power Star Trek spaceships. "This one isn't speculative," said Kloza. "The wheels are in motion. It just takes a while for it to deluge into retail."

The news about the expected rise in gasoline was first reported in USA Today Friday.

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