4/20/2006 Houston-- Bad news for drivers this summer: gas prices are expected to be more than 10% higher than last summer and may exceed $3 per gallon in some parts of the U.S. including Houston. Here is a look why:

  1. What is fueling the price rise? Growing global demand and investors spooked by political tensions in the Middle East have pushed crude oil prices up. Gasoline productions in the U.S. is down 9% compared with 2005, as hurricane-damaged refineries struggle to return to full production. Finally changes in energy laws are prompting fuel suppliers to use corn-based ethanol as an additive to help gas burn more cleanly, instead of the additive MBTE, which has health risks. Houston is beginning to add 10% ethanol into gas supplies (check out the sticker on the pump next time). But ethanol supply problems have raised gas prices.

  2. Isn't $3 per gallon a lot? Does the term "highway robbery" ring a bell? And prices may approach the all-time inflation adjusted high of $3.12 per gallon set in 1981.

  3. Do higher prices help anyone? The greedy-selfish oil companies. Ok that was a bit to much but yes oil companies are tallying record-high profits. Their execs are cashing in too. ExxonMobil disclosed last week that Lee Raymond, who retired as its CEO in January, earned a whopping $69.7 million or converted to $190,000 PER DAY in 2005.

  4. Are people cutting back on driving? Apparently not but they should. The Energy Department predicts U.S. motorists' total gasoline usage this summer will be 1.5% higher than in 2005 because of a growing economy and more cars on the road. With that said, people should note that each one of us determines the supply and demand curve of gasoline. The more you drive, the more everyone has to pay. Keep that in mind the next time you take a trip.

  5. What might push prices down? A miracle. Reality is that high gasoline prices are here to stay. Prices could drop as refineries recover. A resolution to the nuclear-research standoff with Iran would calm nervous markets, as would stability in Nigeria, a major oil supplier whose production has been hit by strikes and political unrest. But really, how much could prices drop. Bottom line is that we will pay a premium each time we drive our cars.

(By Kathleen Kingsbury; Commentary by Shaun Yeu)