Here’s an SAT analogy that may put the nation’s pump prices into perspective.

   N.Y. gasoline futures prices are to nationwide street prices, as the Fed Funds’ rate is to adjustable mortgage quotes. The difference, as I’ve discussed in this space before, is that the wholesale petroleum market is metaphorically, an adjustable rate mortgage that adjusts every business day.

   Gasoline futures hit $1.335 gal in the dead of January 2007, but as I write this, the nearby futures contract is worth $2.43 gal. So, this prime benchmark for wholesale and retail prices across the U.S. has moved up by $1.095 gal, or a tidy 82 percent in about 100 days.

   I certainly thought we would see a significant high tide for wholesale prices this Spring, but I previously suggested that tide would be close to the historical average, with a likely upwelling of about 60 percent. We’re now some 30cts gal above that average tidal increase, so I clearly misunderestimated the Spring surge.

   Accordingly, I would venture that we will see a $3.00 gal average nationwide street price in the next several days. A general rule of thumb is to take the local wholesale price and add perhaps 60cts gal, and that should give you a decent estimate of where retail prices should be. Right now, most of the wholesale markets across the country find unleaded regular gasoline selling in excess of $2.40 gal, so $3.00 gal or more is likely for most markets. The debate will now switch to how much time will the country spend at these levels (I would say weeks, as opposed to months, or years) and whether we exceed the $3.057 gal all time high reached on Labor Day weekend 2005.

  In the next day or two, the OPIS staff will provide a scorecard that measures precisely how stunning the market performance was for April 2007, and it will detail some of the winners and losers in this huge updraft. But for now, here are a few observations:

·         Forget about $100 bbl crude oil - - that represents cheerleading from folks with fortunes tied to such an unlikely eventuality. But very quietly, the price of bulk gasoline in most of the U.S. major markets, has exceeded $100 bbl. The price currently varies from $2.415 gal ($101 bbl) for Gulf Coast conventional (non-reformulated) gasoline to $2.73 gal ($114.66 bbl) for California blendstock.

·        That said, the “Balkanization” of gasoline grades is leading to large differences between specific blends. If you drive from the Poconos to New York City, you might see a huge difference in price. That’s because the conventional gasoline used in northeastern Pennsylvania is about 15cts gal cheaper than the reformulated gasoline required in the N.Y. metro area. Similar disparities are seen in other areas where counties have different gasoline specs.

·        Gasoline demand will get intense scrutiny in May. The most reliable data on gasoline demand comes from the retailers, and they now report sales that are flat or perhaps 1.0-1.5 percent above the same period a year ago. The data from the American Petroleum Institute and the Department of Energy is extrapolated and I suspect that talk about inordinately high demand will give way to sound bites about “demand destruction” next month.

·        There is considerable talk about whether the ongoing troubles among the nation’s refineries represents the “new normal” where stints on the refiners’ equivalent of a baseball DL represent the norm.  Refineries are more complex and more sophisticated than ever before and there has certainly been a spate of events, hiccups, fits, and unsuccessful restarts this Spring. However, similar “clusters” of refinery problems in years’ past have given way to many weeks and months of smooth operations. And remember that we hear more about refinery problems these days because of the tremendous amount of money riding on investment in gasoline futures and public refining companies. There are many more news’ eyes focused on refining, and more regulatory scrutiny as well.