API: Production costs driving gasoline prices

API chief economist John Felmy said gasoline prices are simply driven by the product’s manufacturing costs and that market fundamentals rather than speculation are what drives today’s higher prices.

By OGJ editors
HOUSTON, May 26
-- API chief economist John Felmy said gasoline prices are simply driven by the product’s manufacturing costs and that market fundamentals rather than speculation are what drives today’s higher prices.

Pump prices are up from a year ago because refiners are incurring higher costs for oil and ethanol. Higher credit card fees and sales taxes also are contributing to the increased prices at the pump, Felmy said during a conference call with reporters to discuss gasoline prices going into the Memorial Day holiday weekend in the US.

Gasoline demand in the US was up in this year’s first quarter compared with year-earlier levels. In April, however, demand declined 2.2% from April 2010. Urban areas especially experienced a decline in demand in April, Felmy said, adding that it is difficult to determine whether this dip was the result of the sluggish economy or if it was due to higher gasoline prices.

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