Drivers were hit with the biggest one-day jump in gasoline prices in 18 months Wednesday (Aug. 29) just as the last heavy driving weekend of the summer approaches.
The Associated Press reported that as Hurricane Isaac swamps the nation’s oil and gas hub along the Gulf Coast, it’s delivering sharply higher pump prices to storm-battered residents of Louisiana and Mississippi — and also to unsuspecting drivers up north in Illinois, Indiana and Ohio.
The national average price of a gallon of gas jumped almost five cents Wednesday to $3.80, the highest ever for this date. Prices are expected to continue to climb through Labor Day weekend, the end of the summer driving season.
“The national average will keep ticking higher, and it’s going to be noticeable,” says Patrick DeHaan, senior petroleum analyst at Gasbuddy.com
The wide storm shut down several refineries along the Gulf Coast and others are operating at reduced rates. In all, about 1.3 million barrels per day of refining capacity is affected. So, it’s no surprise that drivers in Louisiana, Alabama, Mississippi and Florida saw gas prices rise by a dime or more in the past week.
But some states in the Midwest are suffering even more dramatic spikes. Ohio prices jumped 14 cents, Indiana prices soared 13 cents and Illinois prices jumped 10 cents on Wednesday alone according to the Oil Price Information Service. Days before Isaac is expected to douse those states with rain, the storm forced the shutdown of a pipeline that serves a number of Midwest refineries.
Gasoline prices are up sharply in the past month on surging crude oil costs and refinery woes, and now are likely to make 2012 the costliest year ever at the pump.
USA Today reported that nationally, gasoline averages $3.71 a gallon — up 31 cents since mid-July and is now higher than year-ago levels in 39 states. Prices are likely to continue climbing through August, with little relief until after Labor Day.
The swift, month-long, 9% price climb has lifted 2012′s average to $3.61 a gallon, vs. 2011′s $3.51, which had been the most expensive year ever for motorists. Even with demand expected to recede after the peak summer driving season, 2012 will surpass last year’s price, says Brian Milne of energy tracker Telvent DTN .
The run-up comes at a time when prices typically have peaked for the year, and just weeks after decreasing demand and slowing worldwide economic growth pushed prices well off 2012 highs. The trend had prompted some industry experts to forecast $3 a gallon gasoline by autumn. Now, Milne expects a top at about $3.90 before dropping in September.
Motorists in the Midwest are already paying that much, or more. Fallout from production cuts at four Illinois refineries has pushed prices in Illinois and Michigan to $4 or higher, while West Coast prices rocketed 40 cents a gallon following the Aug. 6 fire at a Northern California Chevron refinery. (A lawsuit was filed in Contra Costa County Superior Court Wednesday on behalf of nine nearby residents, alleging Chevron was negligent in refinery maintenance. The company says its reviewing the lawsuit.
Crude oil prices continue to rise. Since bottoming at about $78 a barrel in late June, benchmark West Texas Intermediate has soared more than 20%. In mid-day Thursday trading, crude was priced above $95 a barrel, a three-month high.
Scott Anderson, chief economist at Bank of the West, says if prices continue to rise, they could crimp a rebound in consumer spending. The Commerce Department reported Tuesday that July consumer spending rose 0.8%, the largest gain in five months.
Motorists in West Coast states are about to see a big spike in gas prices, the fallout from a fire that cut production at one of the region’s largest oil refineries.
USA Today reported that gasoline prices, now averaging $3.87 a gallon in California, $3.72 in Washington and $3.69 in Oregon, are expected to spike to $4.15 to $4.25 a gallon over the next week to 10 days following Monday’s partial shutdown of a Chevron refinery in Richmond, Calif.
Nationally, gasoline prices have climbed 27 cents a gallon in the past month. While the refinery fire will drive prices along the West Coast, it will also lift the national average above year-ago levels.
“August looks like a very touch-and-go month for the entire country,” says OPIS analyst Tom Kloza, who expects price relief after Labor Day. For the year to date, gasoline has averaged $3.61 a gallon — 10 cents more than the average for all 2011, the most expensive year ever, he says.
Patrick DeHaan, senior oil analyst for gasbuddy.com, expects California, Oregon and western Washington state to experience price spikes like the ones that hit major parts of the Midwest in June, when an Illinois refinery shut down and three others in the state cut production.
“The West Coast is on the launch pad waiting for takeoff,” DeHaan says. “We’re talking over $4 a gallon, easily. It’s not going to be good for motorists.”
Prices in Illinois, Indiana, Michigan, Wisconsin and Minnesota remain as much as 39 cents a gallon higher than the national average of $3.65 a gallon, according to the Oil Price Information Service. “The infection is going to spread from the Midwest to the West Coast,” DeHaan says.
Changes in political and economic conditions on the other side of the world are being felt here as the national average price for regular retail gasoline increased last week for the first time in three months.
“Although oil prices retreated at the end of last week, it’s likely motorists have seen the last of the summer price reductions at the pump,” said Jessica Brady, AAA spokeswoman, The Auto Club Group.
According to a report in the Gainesville (Fla.) Sun, the national average price of regular unleaded gasoline is $3.38, 5 cents more than last week.
The price of gas peaked the week of April 6, when the weekly average was $3.92, AAA reported. Prices then entered a downward trend until last week when motorists saw prices jump overnight. Bullish news hit the market at the start of the month and caused oil prices to spike, which has led to the rise at the pump.
The two main factors that pushed oil prices higher last week, AAA reported, were imposed European sanctions against Iran and an agreed-upon plan by European leaders to save the euro and resolve the ongoing debt crisis.
The European news, among other things, pushed oil prices to $88 a barrel last week, however the upward pressure soon dissipated after more pessimistic economic news was released. A barrel of oil settled Friday at $84.45 on the New York Mercantile Exchange — 51 cents less than the prior week.
The darkening clouds of the slowing economy could provide a bright spot for consumers: gasoline at $3 a gallon — or less — by autumn
USA Today reported that nationally, regular gasoline averages $3.47 a gallon, down 47 cents from this year’s high in April and well below the $5-a-gallon fears fanned earlier this year by energy speculators, Middle East tensions and oil refinery glitches that crimped supplies.
Those issues appear to be over, at least for now. Thursday, benchmark West Texas Intermediate crude oil fell 4 percent to $78.20 a barrel, the lowest price since early October and off 20% year-to-date. Coupled with slumping wholesale gasoline contracts for fall delivery, “the market is suggesting gas below $3 by Halloween, and certainly by Thanksgiving,” says Tom Kloza of the Oil Price Information Service.
With production up, oil inventories at 21-year highs and tepid consumer demand, gas prices have fallen for 11 weeks. They’re expected to drop more sharply after the peak summer driving season.
“Demand just isn’t there,” says Brian Milne of energy tracker Televent DTN, noting an Energy Department report that demand for fuel over the past four weeks has fallen 5% below year-ago levels. “It’s been dreadful.”
Barring supply disruptions heading into hurricane season — which helped drive pump prices to an all-time $4.11 high in July 2008 — consumers could soon be filling up at prices not seen since December 2010.
The expected slump in gas prices could have far-ranging impact, from consumer spending to the presidential elections, where debate over the swift price run-up early this year dominated much of the debate over which political party and energy policy could keep a lid on prices. Now, economists say plunging prices could provide a bit of a floor on the sputtering economy.
“You’re talking about roughly $114 billion in extra consumer spending power, and that’s a big deal if overall consumer spending is up 2% to 2.5% this year,” says Nigel Gault, chief U.S. economist at economic forecasters IHS Global Insight.
Gasoline prices fell for the fifth consecutive week, extending a sharp decline that has eased fears that prices would soon top $4 a gallon at the pump.
The Wall Street Journal reported that the average price of regular gasoline dropped to $3.790 a gallon as of Monday (May 7), the U.S. Energy Information Administration said, down 3.8% from the 2012 peak of $3.941 reached April 2.
Many of the forces that drove gasoline up are reversing, and that is helping bring prices back down, though they still remain near record highs. Tensions over Iran’s nuclear program have eased, while softening economies in the U.S. and Europe have curbed demand. At the same time, some refineries pegged for closure are coming back online, and bottlenecks in the supply of crude oil are becoming unclogged.
The changes have led analysts to temper their price predictions for the summer driving season. A few months ago, some were saying pump prices could shoot above $4 a gallon and even reach $5 by the summer, but now they say that is highly unlikely.
That is good news not just for America’s drivers, but also for the economy and potentially President Barack Obama, who has spent much of the year deflecting Republican criticism of rising fuel prices and his stewardship of the economy.
To read the entire Wall Street Journal article click here.
A surge in gasoline prices earlier this year sparked talk of $5 a gallon by this summer, but prices at the pump have been ticking lower in April, and it appears they’ll continue falling as the driving season approaches.
CNN Money reported that this rosy scenario is prompted by the fact that the price for one of the most common types of gasoline futures traded in New York has dropped 30 cents, going from over $3.40 a gallon at the beginning of April to $3.10 a gallon Wednesday.
Futures contracts are financial instruments that buyers and sellers of large amounts of gasoline — or any commodity — use to set prices. Analysts say the current drop in gas price futures should begin to appear in gas prices at the service station over the next few weeks.
“We’re certainly going to see prices move lower at this point,” said Stephen Schork, publisher of the industry newsletter the Schork Report. While retail prices are expected to move lower, Schork said the decline might not be as steep those seen in the futures markets.
The main reason for lower gasoline futures prices is the declining cost of Brent crude and other crude oil that gasoline is made from.
Brent crude has dropped from over $125 a barrel in early April to under $120 currently, largely a a result of tensions easing with Iran over its nuclear program. Recent signs of a slowing global economy have also helped push down prices.
Gasoline prices at the pump have begun a similar decline. While much hype was made earlier this about how gas had run up further and faster than any time before and may even reach a new all-time high of over $4.11 gallon, prices have been slowly declining since touching $3.95 a gallon at the beginning of April. Gas prices currently sit at $3.84, according to AAA.
“If we don’t have any supply issues or refinery outages, we’ve seen the highs for the summer,” said Schork.
U.S. drivers will pay an average of 24 cents more per gallon for gasoline during this summer’s travel season, the government said Tuesday (April 10).
Northjersey.com reported that gasoline will cost an average of $3.95 per gallon from April through September, an increase of 6.3% from the same period last year, the Energy Information Administration predicted. The peak should come in May, when gas averages $4.01 per gallon, the agency said.
Gasoline already has jumped by 20% this year to a national average of $3.922 per gallon, according to auto club AAA’s Daily Fuel Gauge Report. Prices, which are posted on station signs on street corners across America, have both a financial and psychological effect on drivers, experts say. Already, high prices have led to strong sales of gas-sipping vehicles like the Toyota Prius, and they’ve become a major issue in the Presidential campaign.
Further price hikes will affect the kind of vacations Americans take, and will likely impact how they feel about the economy. They may even influence how Americans vote in November.
“People are going to notice” if the national average crosses $4,” said Fred Rozell, retail pricing director at Oil Price Information Service. “Anytime the price goes up, it’s going to affect things.”
The government said there’s a small chance the price could climb as high as $4.50 a gallon in June.
To read the entire article at northjersey.com click here.
The average price for regular gasoline at U.S. filling stations increased 3.74 cents over the past two weeks and may have peaked, according to Trilby Lundberg, the president of Lundberg Survey Inc.
Bloomberg News reported that the price jump to $3.9671 a gallon covers the period ended April 6 and is based on the Camarillo, Calif.-based company’s survey of about 2,500 stations.
“Price hikes at the pump have been losing steam for weeks,” Lundberg said yesterday in a telephone interview. “Crude oil prices have slipped and if they don’t rebound in the very near future, gasoline prices will peak very soon, if they haven’t already.”
The highest price in the lower 48 U.S. states among the cities surveyed was in Chicago, where the average was $4.45 a gallon, Lundberg said. The lowest price was in Tulsa, Oklahoma, where customers paid an average of $3.66.
“The price spikes had been led by places like Chicago and Los Angeles,” Lundberg said. “Now, we see some of these prices tumbling.”
Gasoline on the New York Mercantile Exchange fell 1.3% to $3.3405 a gallon in the two weeks ended April 5.
“Compared to the magnitude of recent price spikes, this is small,” Lundberg said. The increase was the smallest rise for the motor fuel since the two weeks between Jan. 6 and Jan. 20, according to Lundberg Survey. A decline in U.S. oil prices over the past two weeks has helped, she said.
Prices had surged on speculation that refinery closings would tighten supplies and as crude rose on concern that tensions with Iran over its nuclear program would reduce oil supplies. New York-traded West Texas Intermediate crude is up 4.5% in 2012, and Brent oil on the ICE Futures Europe exchange has gained 15 percent.
Retail consumption this year through March 30 was 5.6% lower than the same period in 2011, according to MasterCard Inc. (MA)’s SpendingPulse report on April 3. Fuel use over the previous four weeks was 5.9% lower than a year earlier, a record 54th consecutive decline.
Oil may decrease this week after the Federal Reserve signaled it may refrain from more monetary stimulus and U.S. inventories surged the most since 2008, a Bloomberg News survey showed.
Rising U.S. gasoline prices will probably prompt Americans to visit tourist sites closer to home and limit their itineraries, travel adviser AAA said.
Bloomberg reported that Mark Brown, executive vice president for the non-profit group with more than 53 million members, told a House Natural Resources Committee hearing that its members were making adjustments as gasoline approached $4 a gallon.
“Members are not canceling their vacation driving plans at this time, but may scale back the distances and the number of destinations,” Brown said in written testimony distributed before a Tuesday hearing in Washington.
Crude oil advanced more than 8% this year, and the average price for unleaded gasoline at the pump climbed about 19% to $3.90 a gallon yesterday (March 27), according to AAA data.
More than half of Americans who plan to travel by car this summer said further gasoline-price increases would make them take fewer trips or spend less on meals, shopping and entertainment, Gilliland said, citing data from the U.S. Travel Association.