If you had May 4 as the target day for 2007 gasoline prices hitting $3.00 gal, this is your lucky day and you can cash in on the office pool. The average retail price for unleaded regular hit $3.012 gal this morning, up 31.2cts gal in one month, but a more modest 9.4cts gal above the May 4, 2006 date.

   But surprise: only four states are at record highs. California leads the pack with an average $3.455 gal (a $145 bill if the Governator fills his tank while running on empty) and only Oregon, Utah, and Washington also have achieved new high water marks.

   For details of specific state and metropolitan area prices, visit www.fuelgaugereport.com

   Silver Linings  . . .

    We first hit $3.00 gal after Hurricane Katrina ransacked the Gulf Coast, but we only spent eight days there in 2005 (September 3-10). We again surpassed $3.00 gal on July 27, 2006, but could stay above that mark for only nineteen days (July 27 through August 14). I’m betting that there may be a similar short stay in 2007, and I would not be surprised to see a modest retail dip before Mother’s Day.

   The good news – many wholesale gasoline markets are down sharply from their highs. California blends are off about 20cts gal from Monday, and Gulf Coast and New York numbers are down anywhere from 15-25cts gal from their April 30 highs.

   The bad news – this Spring has seen similar fallbacks give way to new bullish legs, often catalyzed by refinery glitches. So, it’s too soon to say whether the wholesale top has been formed, and it’s the wholesale numbers that drive the retail numbers that ultimately drive the drivers crazy!  But breaking the all time street price record of $3.057 gal (9/5/2005) is not assured, nor is it a certainty that the $3.03 gal record 2006 high will be surpassed. This is not the four minute mile, after all.

   Since another nickel upside is in doubt, I have to once again reiterate that a $4.00 gal price represents pure hyperbole, at least for anyone who doesn’t require premium gasoline in tony California markets. But Americans will spend about $1.17-billion each day this weekend on their gasoline, based on recent demand estimates. 

Near Term Outlook

   Spring trading is often loaded with trap doors, but more commonly this Spring, we’ve seen trampolines that sometimes masqueraded as chutes. For the most part, oil traders - - and investors - - have chased refined products higher despite the amber lights that history gives us for reference.

   All but perhaps four of the last 28 preseason gasoline rallies have reached their apex before Memorial Day. This year is bucking the trend, and there has been no shortage of commentary suggesting that “this year is different.” The most prevalent theory of late is that the amount of time any individual refinery spends on the industry equivalent of baseball’s “disabled list” has been extended. That theory got plenty of ink among futures’ brokers and even mentioned by refinery execs hosting their first quarter conference calls.

   Those can hardly be considered to be objective voices. Companies with long positions in the refined products’ marketplace are always prone to cheerleading, so that explains the rhetoric among speculators. And refiners who missed Wall Street earnings’ estimates because of longer than expected downtime could conveniently cite the longer maintenance theory as a convenient excuse.

   This month is critical. Gasoline has sold occasionally for more than $50 bbl above sweet crude in California in May.  A basket of U.S. spot gasoline prices compiled by OPIS for April shows the average unleaded grade selling for an average $27.60 bbl above crude over the 30 days. A year ago, the average $22.30 bbl margin was regarded as excessive. From another perspective, refiners made about four times as much margin on gasoline last month than in January 2007.

   I continue to believe that the West Coast circumstances are different from the rest of the country. This was a year that saw much more Pad 5 refinery maintenance overlapping through the first and second quarters, and some key plants have yet to complete the work.

   But the rest of the country actually had a lighter Spring 2007 refinery maintenance schedule compared to some previous years. However, bad luck in the form of a couple of fires and plenty of Spring glitches shouldn’t necessarily be interpreted as a blueprint for operations in late May and June.

   The West Coast bears some special scrutiny over the next few weeks. It achieved its wholesale top in 2006 on May 2, and retail prices peaked soon thereafter.

   Last year saw “demand destruction” - - a Wall Street buzzword, but nonetheless a worthwhile description  - - when retail prices advanced above $3.25 gal in this region. It’s too soon to say whether we’ve hit the 2007 tipping point, but I’ve never bought into the investment house opinion that prices need to be at nearly $4.00 gal in order to impact behavior.