Archive for Friday, May 23, 2008

Gas prices reach new record as holiday travelers hit road

Gasoline tanker trucks line up to fill up at the Conoco Phillips storage and distribution yard Thursday in Portland, Ore. Gasoline prices are going up in advance of Memorial Day weekend, averaging $3.83 a gallon nationwide and $3.71 in Lawrence.

Gasoline tanker trucks line up to fill up at the Conoco Phillips storage and distribution yard Thursday in Portland, Ore. Gasoline prices are going up in advance of Memorial Day weekend, averaging $3.83 a gallon nationwide and $3.71 in Lawrence.

May 23, 2008

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— Americans getting an early start on the Memorial Day weekend found that gasoline prices again sprinted to a new record high overnight, reaching a national average above $3.83 a gallon. Some analysts predict gas will break past $4 as early as next week.

Oil prices, meanwhile, fell Thursday after setting a new trading record of $135.09 overnight. A stronger dollar gave some investors reason to sell oil futures to lock in profits from crude's record run. But concerns about falling supplies and rising demand are expected to keep propelling prices higher in the days and weeks to come.

Oil's surge is contributing directly to the pain consumers feel every time they fill up. At the pump, the average national price of a gallon of regular gas rose 2.4 cents overnight to $3.831, according to a survey of stations by AAA and the Oil Price Information Service. Prices are 61 cents higher than a year ago.

In Lawrence, the average price for a gallon of regular gas reached a record $3.713, according to AAA. That was up 1.3 cents from a day earlier and up from $3.334 a year ago.

Unlike last year, oil prices are setting new record highs on a daily basis. That's pushing gas prices higher, and analysts see no reason for gas not to follow.

"We're going to blast past $4," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

Prices may rise as high as $3.90 on a national basis by this weekend, he said. Prices are already above $4 a gallon at many stations around the country, and are averaging more than $4 in California, New York and Illinois, among other states.

The average price in Kansas is $3.761, according to AAA.

Oil prices rose to $135.09 a barrel in overnight electronic trading on the New York Mercantile Exchange before retreating to settle down $2.36 at $130.81 a barrel by afternoon in New York.

Analysts said oil futures are caught between the supply and demand concerns that boosted crude to its latest record, and a desire by some investors to cash in some profits. The dollar, one of the factors that has fed oil's rally from about $65 a year ago, strengthened against the euro Thursday. When the greenback gains ground, commodities such as oil lose their value as hedges against inflation. Also, a stronger dollar makes oil more expensive to investors overseas.

At times in a price runup that's added nearly $9 to a price of crude this week, and almost $16 over the past month, investors will sell to take profits, analysts said. Crude rose $4.19 a barrel on Wednesday alone.

The Paris-based International Energy Agency on Thursday said it is worried about whether there is enough oil to meet global demand, and it is working on a review of the world's 400 largest oil fields that could lead to a major revision in its closely-watched forecasts.

"The market is really structurally tight ... oil demand is not growing that fast but supply is constrained," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Some analysts say crude has been boosted in recent days by especially strong demand for diesel in China, where power plants in some areas are running desperately short of coal after last week's earthquake, Kevin Norrish, an analyst with Barclays Capital PLC, said new data from China shows demand for diesel was already rising quickly before the disaster. Chinese diesel imports rose 9.2 percent in April compared to last year, Norrish wrote.

Still, many analysts argue that oil prices have risen far beyond levels that can be justified by supply and demand. This school of thought believes the dollar's decline has attracted speculators to oil and other commodities, artificially inflating prices. Some analysts see signs in the prices differences between the current July crude contract and contracts for delivery in future months that could mean oil prices are set to decline in coming months.

Comments

Lindsey Buscher 6 years, 10 months ago

Well, in all honesty, if the gas price hike was on purpose so people will finally 'get it', and stop depending on cars and long commutes so much , then it was genius!And if the congress reaming the oil companies is just a dog and pony show (which is likely) to make it seem like they are doing something about it, then again, GENIUS!Because this whole country needed a wake-up call, who the heck needs an SUV, really? (If you really need to haul, then get a pickup truck). I, for one, am tired of keeping my travel to a minimum and yet paying more as a result of the exponentially increased demand to fuel the craze for decreasingly fuel-efficient-vehicles over the past 10-20 years.Hopefully people are starting to get it.

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