Average gasoline prices in the D.C. area have surpassed $4, the earliest time of year that they have ever done so, report The Post’s Brad Plumer and Maggie Fazeli Fard :
And area drivers may need to brace for another bout of sticker shock at the pump. Tom Klozma of the Oil Price Information Service says national gasoline prices could peak as high as $4.25 a gallon on average this spring. That would likely translate into record prices in the District.
“For goodness’ sake, it’s only March, and this is the earliest point in the year that pump prices have soared to this price level,” John B. Townsend II, AAA Mid-Atlantic’s manager of public and government affairs, said in a statement.
“It took five months to reach this in 2011, and that took place just on the cusp of the summer driving season,” he added in an interview. “But this time around, for no apparent rhyme or reason other than exceptionally high crude oil prices, it is occurring less than three months into the year.”
According to AAA’s national survey of gas prices, a gallon of regular-grade fuel is averaging $4.15 in the District. The average price was about $3.85 a gallon a month ago. The highest recorded average price for regular gas in the District was $4.20 on May 12, 2011, according to AAA.
Gas prices in the city have surpassed the $4 mark three times before, the first time in June 2008. But they’ve never done so this early in the spring. A year ago, gas prices in the District averaged $3.77 a gallon.
At an event Thursday in Washington, President Obama said that Americans are getting hit twice over gas prices — at the pump and with tax subsidies, The Post’s Scott Wilson and Ed O’Keefe report:
President Obama struck an explicitly populist tone Thursday in calling for an end to federal subsidies for the petroleum industry, arguing that members of Congress can “stand with big oil companies, or they can stand with the American people.”
A short time after Obama spoke, Senate Democrats forced a vote on a measure to end tax cuts for the five largest oil companies, capping a week-long coordinated effort by Democrats to paint Republicans as too cozy with the oil industry.
Bringing a campaign-trail tone to the Rose Garden, Obama said the billions of dollars in federal subsidies received annually by highly profitable oil companies make no sense at a time of severe fiscal strain. He noted pointedly that those profits “go up every time folks pull up into a gas station,” where prices have risen in recent months and now threaten not only the economy’s fragile recovery but also his reelection prospects.
“With record profits and rising production, I’m not worried about the big oil companies. With high oil prices, they’ve got more than enough incentive to produce more,” Obama said. “I think it’s time they got by without more help from taxpayers who are having a tough enough time paying their bills and filling up their tanks. And I think it’s curious that some of the folks in Congress who are the first to belittle investments in new sources of energy are the ones fighting the hardest to keep these giveaways for big oil companies.”
In making those comments, Obama joined a debate that began Monday when Senate Democrats introduced a measure to end $24 billion in tax cuts for the five largest oil companies and authorize new tax credits for alternative energy resources. Democrats believe that the combination of tax cuts for big oil and credits for alternative energy sources would eventually drive down the price of gasoline and pay down the federal deficit.
But Republicans hammered Democrats all week, believing instead that Obama’s energy policy should move more aggressively to encourage U.S. oil production, and that eliminating federal subsidies will drive up gas prices in the short term.
Meanwhile, France’s Prime Minister Francois Fillon said that there is a “good chance” that Europe and the U.S. will release oil from their strategic reserves. Wonkblog writer Brad Plumer reports:
With oil prices still in the stratosphere, the rumblings are getting louder that the world’s nations may release some of the crude they have saved up in their strategic reserves. On Thursday, French Prime Minister Francois Fillon said there was a “good chance” that the United States and Europe will tap those reserves.
But experts remain sharply divided over whether now is the right time for countries to sell off oil from their stockpiles. The U.S. has 696 million barrels of crude sitting in its Strategic Petroleum Reserve, stored in salt caverns near the Gulf of Mexico. That’s enough to supply the country for 36 days. Similarly, the 28-country International Energy Agency has said that it remains “ready to act if market conditions so warrant.” Yet the IEA has also maintained that the reserves should only be tapped in the event of a severe supply disruption — and not merely to combat high prices.
The Strategic Petroleum Reserve has only been tapped three times in its 37-year history, first during Operation Desert Storm against Iraq under President George H.W. Bush, then during Hurricane Katrina, and again last year when civil war in Libya took about 2 percent of the world’s oil off the market.
This time around, however, there’s no single disruptive event to point to. Prices are high because supplies are tight and tensions with Iran are making markets skittish. “Those were all short-term, temporary disruptions,” said James Hamilton, an oil expert at the University of California San Diego, in a recent interview. “With Iran, we still don’t know the endgame yet. There are still too many uncertainties.” For that very reason, the Economist recently editorialized that crude should only be released in a “genuine emergency” — say, if Iran shut down the crucial oil shipping lanes in the Strait of Hormuz.
Other experts disagree. If the IEA were to release oil in the next few weeks, there are plenty of places it could point to where supply disruptions are taking place. Recent events in South Sudan, Yemen, and Syria have removed about 600,000 barrels of oil from the market. Japan has shut down 53 of its 54 nuclear reactors following the disaster in Fukushima, and the country is now ramping up its purchases of low-sulfur sweet crude to generate electricity.
“One could say that this is the sort of disruption that the Strategic Petroleum Reserve was built for,” says oil analyst Philip Verleger. He notes that much of the oil in the U.S. reserves is light sweet crude — the sort in high demand by Japan right now. Yet most of the U.S. refineries that process light crude have shut down recently, leaving facilities like the massive Port Arthur refinery that are able to handle the heavy stuff. “We don’t need that sweet crude, Japan can use it, and that would take a lot of pressure off the oil markets.”