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Gas prices pass $3.40 a gallon, are expected to rise higher
Thursday April 17, 3:27 pm ET
By John Wilen, AP Business Writer
Gas prices pass $3.40 and are expected to rise higher; oil gyrates
after setting own record
NEW YORK (AP) -- Retail gas prices pushed past a record high $3.40 a
gallon Thursday, fulfilling expectations that they'll keep climbing
toward $4 as the summer driving season approaches.
Oil prices, meanwhile, fell slightly after setting yet another record
high overnight. Analysts said investors were locking in gains from
crude's ongoing rally.
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At the pump, the average national price of a gallon of unleaded gas
rose 1.9 cents overnight to $3.418 a gallon, according to a survey of
stations by AAA and the Oil Price Information Service. Diesel fuel
also hit a new record of $4.146 a gallon after jumping 1.7 cents
overnight, the survey said.
The soaring cost of both fuels is pressuring consumers, who gas up
their cars and buy goods that grow more expensive because of rising
transportation costs. And their plight will only worsen; many analysts
expect average national gas prices to peak close to $4 a gallon later
in the spring. Prices are already that high in some parts of the
country, including California.
With gas reaching another milestone, analysts are questioning whether
consumers, who have already curtailed their driving over the past
month, will cut back further in response to rising prices. They point
to the trends seen last year in California; when prices soared past
$3.40 a gallon in the state last November, demand plummeted by 3.7
percent.
Some analysts see California's experience as a sign that a plunge in
national demand could also occur. Still, when summer arrives, demand
will rise regardless of how high prices have soared.
"July and August will be very busy," said Tom Kloza, publisher and
chief oil analyst at the Oil Price Information Service in Wall, N.J.
"If you've got a vacation planned to Disney World or something, you're
still going to take the vacation."
This expectation of higher summer demand is boosting gas prices now,
but prices are also rising because refiners are switching over from
winter grade gasoline to the more expensive but less polluting fuel
they're required to sell in the summer. That has pulled supplies lower
lately as refiners try to sell off all of their winter fuel. Short
supplies of key blending components needed for summer gasoline are
exacerbating the problem.
Oil, meanwhile, has spiked higher on concerns about falling supplies
and rising global demand, and as a weaker dollar has attracted
speculative investors to crude futures. Crude rose to a new trading
record of $115.54 overnight as the dollar fell to a new low against
the euro, but later pulled back when the dollar strengthened.
Light, sweet crude for May delivery fell 7 cents from Wednesday's
close to settle at $114.86 a barrel on the New York Mercantile
Exchange, the contract's first lower close in a week.
Commodities such as oil are seen by many investors as a hedge against
inflation and a weaker dollar. A falling dollar also makes oil cheaper
to overseas investors. The effect tends to reverse when the U.S.
currency strengthens.
Crude prices have jumped more than 4 percent this week due in part to
the falling dollar, but also because of supply and demand concerns in
the U.S. and abroad. Domestic gasoline and crude supplies fell last
week. Meanwhile, Russian oil production dropped this year for the
first time in a decade, according to an International Energy Agency
report. China's economy continues to grow at a breakneck pace,
demanding more oil and fuel. And the Federal Reserve is expected to
cut interest rates at least twice more this year, which will further
weaken the dollar.
The combination of all these factors will push oil prices even higher
in coming weeks, said James Cordier, president of Tampa, Fla., trading
firms Liberty Trading Group and OptionSellers.com.
"I think we're going at least to $125," he said. "That'll probably
translate to about $3.80 (a gallon) at the pump."
In other Nymex trading Thursday, May gasoline futures rose 1.88 cents
to settle at a record $2.9578 a gallon after earlier rising to a
trading record of $2.9749 a gallon. May heating oil futures fell 1.56
cents to settle at $3.2674 a gallon. May natural gas futures fell 5
cents to settle at $10.383 per 1,000 cubic feet.
In London, Brent crude futures fell 23 cents to settle at $112.43 a
barrel on the ICE Futures exchange.
Associated Press writers Pablo Gorondi in Budapest and Gillian Wong in
Singapore contributed to this report.
http://biz.yahoo.com/ap/080417/oil_prices.html?.v=10
Thursday April 17, 3:27 pm ET
By John Wilen, AP Business Writer
Gas prices pass $3.40 and are expected to rise higher; oil gyrates
after setting own record
NEW YORK (AP) -- Retail gas prices pushed past a record high $3.40 a
gallon Thursday, fulfilling expectations that they'll keep climbing
toward $4 as the summer driving season approaches.
Oil prices, meanwhile, fell slightly after setting yet another record
high overnight. Analysts said investors were locking in gains from
crude's ongoing rally.
ADVERTISEMENT
At the pump, the average national price of a gallon of unleaded gas
rose 1.9 cents overnight to $3.418 a gallon, according to a survey of
stations by AAA and the Oil Price Information Service. Diesel fuel
also hit a new record of $4.146 a gallon after jumping 1.7 cents
overnight, the survey said.
The soaring cost of both fuels is pressuring consumers, who gas up
their cars and buy goods that grow more expensive because of rising
transportation costs. And their plight will only worsen; many analysts
expect average national gas prices to peak close to $4 a gallon later
in the spring. Prices are already that high in some parts of the
country, including California.
With gas reaching another milestone, analysts are questioning whether
consumers, who have already curtailed their driving over the past
month, will cut back further in response to rising prices. They point
to the trends seen last year in California; when prices soared past
$3.40 a gallon in the state last November, demand plummeted by 3.7
percent.
Some analysts see California's experience as a sign that a plunge in
national demand could also occur. Still, when summer arrives, demand
will rise regardless of how high prices have soared.
"July and August will be very busy," said Tom Kloza, publisher and
chief oil analyst at the Oil Price Information Service in Wall, N.J.
"If you've got a vacation planned to Disney World or something, you're
still going to take the vacation."
This expectation of higher summer demand is boosting gas prices now,
but prices are also rising because refiners are switching over from
winter grade gasoline to the more expensive but less polluting fuel
they're required to sell in the summer. That has pulled supplies lower
lately as refiners try to sell off all of their winter fuel. Short
supplies of key blending components needed for summer gasoline are
exacerbating the problem.
Oil, meanwhile, has spiked higher on concerns about falling supplies
and rising global demand, and as a weaker dollar has attracted
speculative investors to crude futures. Crude rose to a new trading
record of $115.54 overnight as the dollar fell to a new low against
the euro, but later pulled back when the dollar strengthened.
Light, sweet crude for May delivery fell 7 cents from Wednesday's
close to settle at $114.86 a barrel on the New York Mercantile
Exchange, the contract's first lower close in a week.
Commodities such as oil are seen by many investors as a hedge against
inflation and a weaker dollar. A falling dollar also makes oil cheaper
to overseas investors. The effect tends to reverse when the U.S.
currency strengthens.
Crude prices have jumped more than 4 percent this week due in part to
the falling dollar, but also because of supply and demand concerns in
the U.S. and abroad. Domestic gasoline and crude supplies fell last
week. Meanwhile, Russian oil production dropped this year for the
first time in a decade, according to an International Energy Agency
report. China's economy continues to grow at a breakneck pace,
demanding more oil and fuel. And the Federal Reserve is expected to
cut interest rates at least twice more this year, which will further
weaken the dollar.
The combination of all these factors will push oil prices even higher
in coming weeks, said James Cordier, president of Tampa, Fla., trading
firms Liberty Trading Group and OptionSellers.com.
"I think we're going at least to $125," he said. "That'll probably
translate to about $3.80 (a gallon) at the pump."
In other Nymex trading Thursday, May gasoline futures rose 1.88 cents
to settle at a record $2.9578 a gallon after earlier rising to a
trading record of $2.9749 a gallon. May heating oil futures fell 1.56
cents to settle at $3.2674 a gallon. May natural gas futures fell 5
cents to settle at $10.383 per 1,000 cubic feet.
In London, Brent crude futures fell 23 cents to settle at $112.43 a
barrel on the ICE Futures exchange.
Associated Press writers Pablo Gorondi in Budapest and Gillian Wong in
Singapore contributed to this report.
http://biz.yahoo.com/ap/080417/oil_prices.html?.v=10
