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Houston Chronicle: Pump prices likely to rise again: 20 more cents may be added in coming weeks

EXTRACT: John Hofmeister, president of Shell Oil, the Houston-based arm of Anglo-Dutch oil major Royal Dutch Shell, agreed “the full price of the $90-plus oil has not yet filtered through to the retail price.

THE ARTICLE

Nov. 12, 2007, 11:09PM
By DAVID IVANOVICH
Copyright 2007 Houston Chronicle Washington Bureau

WASHINGTON — American motorists may be paying more than $3 a gallon to fill up the tank, but they haven’t felt the full pain yet of oil prices north of $90 a barrel, government and industry leaders say.

Prices at the gas pump could rise another 20 cents a gallon over the next two to three weeks, if refiners and gasoline retailers are able to pass along to consumers the full cost of recent crude prices, Guy Caruso, head of the U.S. Energy Information Administration, said.

“We haven’t seen a full pass-through yet,” Caruso said.

Oil prices have risen about $20 a barrel since September, Caruso said. And if those costs were fully passed on to consumers, gas prices would have risen about 50 cents a gallon.

And so far, prices at the pump have risen only about 30 cents a gallon since mid-September, Caruso said.

John Hofmeister, president of Shell Oil, the Houston-based arm of Anglo-Dutch oil major Royal Dutch Shell, agreed “the full price of the $90-plus oil has not yet filtered through to the retail price.

“And you combine that with the potential for hostile winter weather that pressures the fuel oil price, we’re at the razor’s edge of a real price spike — which I hope doesn’t occur,” Hofmeister said. “But you know what? We haven’t seen any diminishing of demand.”

AAA’s Daily Fuel Gauge Report showed motorists nationwide paying an average $3.10 a gallon for regular on Monday, up from $2.76 a gallon a month ago.

Prices remained more moderate in Houston, with motorists paying $2.89 a gallon Monday, up from $2.57 a month ago, AAA reported, using data collected by the Oil Price Information Service.

Also Monday, oil futures fell after Saudi Arabia’s oil minister, Ali Naimi left open the possibility that the Organization of the Petroleum Exporting Countries will agree to increase output next month.

Light, sweet crude for December delivery fell $1.70 to settle at $94.62 a barrel on the New York Mercantile Exchange.

A rebound in the dollar on Monday also pressured crude prices. Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the U.S. currency is falling. Many analysts blame speculative investing driven by the falling dollar for the autumn rally in crude prices.

December gasoline dropped 3.95 cents to settle at $2.4165 a gallon on the Nymex, while December heating oil futures fell 3.67 cents to settle at $2.5821 a gallon.

December natural gas rose 6.4 cents to settle at $7.961 per million British thermal units on forecasts for cooler weather in the Northeast and Midwest over the next few weeks.

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Chronicle reporter Brett Clanton in Houston and the Associated Press contributed to this report.

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