Gasoline Prices

Americans have become more optimistic about the economy, and they are giving President Bush some of the credit, a new Los Angeles Times/Bloomberg poll shows. Republicans running for election could benefit from the development, as voters say the economy will influence their choices in November more than any other national issue, including the war in Iraq and terrorism. Consumer confidence fell this summer as gasoline prices peaked and the housing market weakened. Those polled in July were almost evenly split on the state of the economy, with 49 percent saying the economy was doing badly.

Why are gasoline prices so high? Why have they shot up so fast? Why don't they fall back just as quickly when the price of oil dips in global markets? Here are some answers. Q. Why are gas prices so high? A. Global demand for oil has grown quickly in recent years, driven up especially by China's and India's fast-growing economies, although the United States remains by far the biggest oil consumer. Global demand for oil is now about 84 million barrels a day. That almost equals the entire supply available; global oil-production capacity exceeds demand by only about 1.5 million to 2 million barrels per day. In such circumstances, anyone who needs oil soon must pay what the market asks, since there aren't many sellers with excess oil available to seek bargains from.

Oil refineries across America have been troubled by a record number of fires, power failures, leaks, spills and breakdowns this year, causing dozens of them to shut down temporarily or trim production. The disruptions are helping to drive gasoline prices to highs not seen since last summer. These mechanical breakdowns have created a bottleneck in domestic energy supplies, helping to push up gasoline prices 50 cents this year, to well above $3 a gallon. A third of the country's 150 refineries have reported disruptions to their operations since the beginning of the year, a record, according to analysts.

After a summer of high gasoline prices, consumers may be in for another shock this winter, as the rising cost of heating oil and natural gas threatens to make it significantly more expensive to heat U.S. homes. With demand for fuel and electricity soaring, natural gas prices have nearly doubled in the past year, to their highest levels in more than a decade. Heating oil prices have risen 10 percent in the past month. This winter, many homeowners could discover that it costs at least 30 percent more to heat their homes than it did last year.

If recent trips to your local gas station leave you feeling as if a second mortgage might be more useful than a credit card, it's no surprise. After all, gasoline prices nearly doubled in the past 19 months as crude oil prices tripled - meaning that when payment time rolls around each month, it takes more than a glance to tell which bill is from Exxon and which is from Hecht's. And yet, while higher prices for gasoline, heating oil and natural gas are putting an extra pinch on consumers' pocketbooks, research conducted by Merrill Lynch & Co. finds that rising energy prices won't touch off an inflation conflagration that sweeps through the economy.

The nation's trade deficit narrowed in July and producer prices rose at a moderate pace in August, the government reported yesterday, as soaring costs of crude oil and petroleum products were unexpectedly offset by falling imports and muted overall inflation. But economists cautioned that the data, which covers periods before Hurricane Katrina struck late last month, might not indicate sustained improvement. The hurricane has severely disrupted the energy supply system and major transportation links in the Gulf Coast, and that could disrupt trade and lead to higher inflation in coming months.

The record high gasoline prices reached just a week ago in Maryland and much of the nation might seem like a bargain compared with what many experts say could occur at the pump once the effects of Hurricane Katrina are felt in the coming days. The powerful storm forced the evacuation of oil rigs and the shuttering of refineries along the Gulf of Mexico, sending natural gas, oil and gasoline prices higher yesterday amid fears that production in one of the nation's most important oil regions could be curtailed for days or weeks.

WASHINGTON - With gasoline prices at record-high levels, Democrats heaped blame on President Bush yesterday, saying he has failed to help consumers who must reach deeper into their pockets and that he broke a campaign vow to exert pressure on oil-producing nations. The harsh rhetoric was a clear sign that just as the busy summer travel season begins, the Democrats are determined to make gas prices a hot issue in a presidential election year. White House aides and Republicans shot back, saying Democrats have stalled a comprehensive energy bill that would reduce U.S. dependence on foreign oil and bring gasoline prices down.

A Royal Cab driver, who prefers to be called simply Cosby, had a friendly wager going with the cashier at a Merit gas station on Eastern Avenue in southeast Baltimore.Cosby was betting yesterday that he couldn't fill his tank for less than $10.He lost the bet, but drove away happy -- the winner in a month-long price war among several filling stations along the Eastern Avenue corridor, just east of Francis Scott Key Medical Center.At Merit, which is leading the war, regular unleaded gas was selling for $1.189 a gallon at the self-service pumps yesterday and was expected to drop further today.

From Wall Street to Main Street, investors watched global oil markets yesterday as the price of crude flirted with the $100-per-barrel milestone, raising the prospect of higher costs for everything from gasoline to groceries. Analysts say this year's steady climb has been propelled by a volatile mixture of tight world supplies, a weakening dollar and speculative trading, which many say has distorted the market and created a price bubble poised to burst. Barring a drastic reversal, forecasters say consumers can expect to see gasoline prices set a record in coming weeks, potentially taking the cost of other goods and services along for the ride.