SUN STAFF AND WIRE REPORTS
Las Vegas set a record today with a $2.58 price for a gallon of unleaded gasoline, capping a week of record prices, and experts say in the short-term there is little relief in sight from skyrocketing pump prices.
That news comes on the heels of the announcement today that crude-oil prices soared to new highs past $66 a barrel as reports of U.S. refinery outages spark fears that gasoline supplies in the world's biggest consuming nation would struggle to meet rising demand.
The threat of hurricanes in the Gulf of Mexico and concerns over Iran's decision to resume uranium conversion activities also weighed on markets, pushing prices upward, analysts said.
But record pump prices and the nation's and world's woes do not figure to thwart tourists who come to Las Vegas by car from neighboring states, analysts say.
"I would not expect a significant impact on tourism," said Sean Comey, spokesman for AAA Nevada. "When it comes to driving even when people have discretion regarding fuel spending, they still tend to travel because fuel cost is a relatively small component.
"Say you are traveling from Los Angeles to Las Vegas. How much more will you spend this year compared to last year at this time? Ten dollars, $20 more? You pack a lunch instead of going to hotel coffee shop the first day and you make back the extra money you spent on fuel."
Prices for all grades of fuel were higher in Las Vegas today than yesterday, a month ago and a year ago.
The $2.58 average price in Las Vegas for a gallon of unleaded, the grade at which market trends are determined, was the highest ever -- a penny higher than Wednesday, 13 cents higher than a month ago and 60 cents higher than a year ago.
But Las Vegas was doing better than elsewhere in the state, as the average statewide price of unleaded today was $2.62 a gallon. Nevada had the third highest price in the nation behind California at $2.72 and Hawaii at $2.70.
"The troubling components of this are that even long-term oil contracts are at very high prices," Comey said. "If refineries are buying oil that they will not be taking delivery on for several years, and are paying top dollar, people feel it is more likely for prices to go up than down."
Still, Comey said, that as recently as January, Las Vegans were paying less than $2 a gallon for fuel and he noted that things can change to bring prices down again.
"Consumers should brace for higher prices over the next couple of days, but beyond that is difficult to to predict what will happen," Comey said.
Tropical Storm Irene was expected to intensify Friday and possibly reach hurricane strength as it approached the U.S. East Coast, forecasters said.
Irene's potential threat to land was still uncertain, as its path had shifted east, according to forecasters at the National Hurricane Center in Miami. Forecasters said the storm could strike the coast anywhere from South Carolina to New Jersey.
With bullish sentiment unabated and crude prices hitting consecutive highs this week, analysts expect front-month crude contracts to test the $70-a-barrel threshold.
Light sweet crude for September delivery gained 60 cents to $66.40 in morning trade on the New York Mercantile Exchange. On Thursday oil prices settled at $65.80 a barrel, the highest close since Nymex trading began in 1983.
Gasoline futures climbed 4.42 cents to $1.994 a gallon while heating oil futures rose 1.65 cent to $1.915 a gallon.
In London, Brent crude for September delivery was trading at $65.94 a barrel, up 56 cents.
Analysts said gasoline demand, currently at its peak in the U.S. summer driving season, was pushing crude's gains. Last week U.S. gasoline demand picked up by 1.4 percent from a year ago, according to government data.
Coupled with new reports of refinery outages this week, traders fear U.S. refiners, already running at 95 percent of capacity, are straining to satisfy the rising demand.
"People fear there won't be enough gasoline at a time when it's so greatly demanded, so they're just buying, buying and buying," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
Oil prices are 46 percent higher than a year ago, but they would need to surpass $90 a barrel to exceed the inflation-adjusted peak set in 1980.
The U.S. Energy Department said Wednesday that gasoline inventories fell 2.1 million barrels to 203.1 million barrels last week.
"The refinery breakdowns are a big issue, they're happening at a time when gasoline supplies are already very tight," Emori said.
Among the latest refinery outages: several units at ConocoPhillips' 306,000 barrel-a-day Wood River, Ill., refinery were shut after a thunderstorm caused a power failure at the plant.
Also, BP PLC shut down a hydrogen recovery unit Aug. 10 at its massive 470,000 barrel-a-day Texas City refinery, following a decision by the company to keep high-pressure units off line until they can be proven safe, BP spokesman Scott Dean said Thursday.
The three other high-pressure units at the refinery were already off line Wednesday and will be kept down pending investigations, Dean said.
The incidents are the latest in a string of outages to hit about a dozen U.S. refineries that together can process 2.7 million barrels a day of crude oil, some 16 percent of total U.S. refining capacity.
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