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NEW YORK -- U.S. motorists are paying more than ever for gasoline this week, but relief is just around the corner as the summer driving season ends and refiners work out kinks that have hampered production, industry sources said Tuesday.
The average pump price for gasoline was $1.75 per gallon Monday, the highest U.S. level ever, according the U.S. Energy Information Administration. In Los Angeles, drivers have paid as much as $2.23 per gallon while in Phoenix, Arizona, pump prices reached $2.79 a gallon.
But September contracts on the gasoline spot market have dropped 40 cents to $1.25 a gallon since last Thursday in a downward trend that is expected to show up at the pumps in coming days.
"Summer driving season is now over, and we should start seeing moderating prices in the next several weeks," said Mary Rose Brown, spokeswoman for Valero Energy Corp., the nation's largest independent refiner.
"It looks like gasoline prices here have peaked," said David Hackett, president of Stillwater Associates, a California-based refining consulting firm. "There's been a strong drop in West Coast spot prices. You can see markets in the East are off in gasoline as well."
Gasoline prices traditionally climb in the summer when families hit the road on vacation. But this August they shot way up because mechanical problems at refineries slowed production.
A rupture on a pipeline shipping gasoline from Texas to Arizona hit supplies in the West and pushed prices even higher. But with the summer vacation season nearing an end, gasoline demand will fall, Brown said.
At the same time, refineries that slowed or shut output for mechanical reasons are getting their equipment fixed and returning to normal production levels. That combination of falling demand and rising supply is responsible for falling spot market prices, which will soon be seen at the pumps.
Pump prices are assumed to be 50 cents per gallon over spot market prices.
Refiners that kept their plants running during this time of rising prices enjoyed a profits bonanza, Hackett said. "The refiners that ran this year made a ton of money, especially through August," he said. "There have been especially high refining margins with all the production problems out here."
The average U.S. refining margin jumped $2.16 to $11.43 per barrel last week, according to a report by UBS analyst Paul Ting issued Tuesday. In California, the average margin was up $2.58 to $19.69 per barrel.