Gas prices rise further, while oil nears $120
Published Tuesday, April 22, 2008
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Stumble It!NEW YORK — Gas and oil prices pushed further into record high territory Tuesday, with retail gas reaching a national average of $3.51 for the first time and crude nearing $120 as the dollar fell to a new low against the euro.
At the pump, the national average price of a gallon of regular gas rose 0.8 cent Tuesday to $3.511, according to a survey of stations by AAA and the Oil Price Information Service. Prices for diesel — used to transport most food, industrial and commercial goods — also rose overnight to a new record of $4.204 a gallon.
Gas prices are nearly 66 cents higher than last year, when they peaked at a then-record of $3.23 in late May, and have prompted many analysts to raise their estimates of where gas is going to go.
“I wouldn’t rule out the possibility that we could get to $4,” said Antoine Halff, an analyst at Newedge USA LLC.
Other analysts are less certain. Fred Rozell, retail pricing director at the Oil Price Information Service, thinks gas prices will rise only another 10 cents to 20 cents nationally. That would mean they would peak near $4.15 a gallon in California, where prices are typically highest, and around $3.50 in New Jersey, where they’re typically lowest.
Gas prices are rising for many reasons, including oil’s record run. Light, sweet crude for May delivery rose to a new trading record of $119.90 before retreating to settle up $1.89 at a record $119.37 a barrel on the New York Mercantile Exchange. The contract expired after the Nymex closed, which contributed to its spike higher as investors scrambled to square bets. June crude futures, which now become the focus of trading, rose $1.44 to settle at $118.07 a barrel, nearly $2 shy of the $120 level.
On Capitol Hill, some lawmakers attempted to escalate scrutiny of oil and gas companies.
“People deserve a more scrupulous cop on the beat in these markets,” said Rep. Jay Inslee, D-Wash., who along with Sen. Maria Cantwell, D-Wash., called for the Justice Department to investigate possible market manipulation.
Meantime, Sen. Dianne Feinstein, D-Calif., praised the Bush administration’s proposal to increase the average fuel economy for new cars and trucks to 31.6 miles per gallon by 2015.
Soaring gasoline prices show “that we have to move much more aggressively toward improving fuel efficiency and help bring relief to American consumers,” she said in a statement.
Many investors see commodities such as oil as a hedge against inflation and a falling dollar. Also, a weaker greenback makes oil cheaper for investors overseas.
The dollar fell Tuesday after the National Association of Realtors said sales of existing homes dropped in March while the median home price declined, raising prospects that the Federal Reserve will cut interest rates further this year to try to shore up the ailing economy. Fed interest rate cuts tend to further weaken the dollar.
Oil also rose on concerns about supply constraints overseas. A Royal Dutch Shell PLC joint venture declared what’s known as force majeure on April and May oil delivery contracts from a 400,000-barrel-a-day Nigerian oil field due to a pipeline attack last week. The move protects the company from litigation if it fails to deliver on contractual obligations to buyers.
In Mexico, oil production slipped 7.8 percent in the first quarter to 2.91 million barrels a day as output at the country’s oil fields waned, state oil company Petroleos Mexicanos said. In Scotland, workers at Ineos PLC’s 196,000 barrel-a-day Grangemouth refinery and petrochemical plant threatened to strike over changes to an employee pension plan.
While gas prices are following oil futures higher, they’re also rising because supplies are falling. Refiners are in the process of switching over from making winter grade gasoline to the more-expensive, less-polluting, form of the fuel they’re required to sell in summer. That’s pushing supplies down as producers try to sell off all of their winter gas.
Gasoline supplies are also being hurt by low profit margins. Refiners have to buy the crude they turn into fuel, but falling demand for gasoline has hurt their ability to raise gas prices as much as they would like. While the average profit margin on gasoline hovers above $10, analysts say margins have gone negative in some parts of the country in recent weeks. In those cases, refiners were actually losing money on every gallon of gas they made. Many refiners have reacting by producing less gas.
“Very high crude prices can constrain gasoline supplies as it hurts the margins,” Halff said.
In other Nymex trading Tuesday, May gasoline futures rose 3.73 cents to settle at $3.0164 a gallon after earlier rising to a trading record of $3.025, while May heating oil futures rose 0.55 cent to settle at $3.3169 a gallon after earlier rising to their own trading record of $3.35. May natural gas futures fell 12.6 cents to settle at $10.607 per 1,000 cubic feet.
In London, June Brent crude rose $1.52 to settle at $115.95 a barrel on the ICE Futures exchange.
Community Discussion
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How long before we reach the point were the consumer stops buying simply because the economy is in such a deep DEPRESSION nobody can afford to pay for the it?
OPEC, Russia, Venezuela and other oil exporting countries want the price to raise.
This President and Congress are patting themselves on the back about 31.6 mpg by 2015. WAKE UP! By the time that happens alternative modes of transportation, electrical power generation or none-at-all will be the norm.
China, EU and Third World exports better be thinking about other markets for their goods, because America won't be buying.
Free Trade agreements ~ nothing to trade.
ENERGY INDEPENDANCE.
For me, I've still got a ways to go, actually, until it starts to affect my driving patterns and the like. I'll probably check out the Lions' garage sale this weekend for a bike, but that's as much driven by my desire to get in shape than any concern about gas prices.
The State of Alaska is now getting over $2.90 per gallon when we fill up our cars and heating oil tanks. Too bad the legislature failed to address the energy crisis that we now find ourselves in. Over 50% of GVEA's electricity is produced from petroleum. Our 50% fuel surcharge for electricity was based upon $80 a barrel. We will likely be paying 25 cents or more in the near future is crude stays up near $120 a barrel.
If you are interested in comparing energy prices and getting more information check out www.fairbanksgas.com and www.fairbanksgas.com/energy . There are cost effective alternatives to heating your home next winter. I heated my 1800 sq. ft. house all winter with less than 200 gallons of heating oil.
Out-in-the-cold, Venezuela is a MEMBER nation of OPEC.
FOR IMMEDIATE RELEASE: April 22, 2008
AEA Announces Energy Plan Town Hall Meetings
Public Forums Scheduled for 25 Communities
(Anchorage) - The Alaska Energy Authority (AEA) announced Energy Plan Town Hall meetings to be held in twenty-five communities throughout Alaska, starting April 28 in Palmer and concluding June 4 in Anchorage.
"Our goal is simple: We must reduce the cost of energy in Alaska by using locally available energy resources," said AEA Executive Director and Energy Coordinator Steve Haagenson. "To reach that goal we are engaging Alaskans in the process of creating and deploying solutions that will not only provide stable-cost energy now, but will help ensure affordable, reliable energy for our children and grandchildren as well."
Teams comprised of representatives from AEA, the Alaska Department of Natural Resources (DNR), the Alaska Department of Commerce, Community and Economic Development (DCCED) and the Denali Commission will be traveling throughout Alaska to meet with the public, business, community and regional leaders and utility managers.
"We are holding these Town Hall meetings to gain answers for two fundamental questions," Haagenson said. "First, we want to ask Alaskans what they know about local energy resources and which resources they think could possibly be developed to help lower costs. Second, we want to ask residents which resources they prefer not to develop, and why."
Fairbanks: April 30, 4-8 PM, Carlson Center, Arthur Buswell Pioneer Room
Fairbanksgas: THANKS FOR THE INFORMATION. Hope to see and other concerned ALASKANS at the meeting.
Weii I will tell all of u that the people makn 2.13 per hour plus tips are not being able to pay for gas at all. Is there not anything we can do? Everyone else is gettn raises, y cant we?
May I suggest that you talk to your boss and ask him/her for a raise? Most managers tend to be pretty reasonable -- after all, they've already trained you, and it'd be a far bigger hassle for them to try to find and train someone new. Try negotiating. If they're unwilling to do so, I'd say it'd be time to start looking for a new job. With the drain in population here in Alaska, plenty of places are looking for entry-level help. Use the potential of a new job that pays more as leverage, and if the boss still won't budge, go for that new job. Yeah, it's tough, but you've got to work the system. It's what I try to do.
I am using bio dieselso I'm save my money. I am not paying at gas station.No way.... I have a bio diesel system at my garage. unload gas engine can't use bio diesel. It can be catch fire under hood
Does the higher price of diesel even out with the greater fuel economy you get when using it?
What is the price for Reg unleaded gas in Anchorage or Fairbanks? here in Southern Okla near the north Texas border it is $3.45 a gallon , while Oklahoma city is at $3.35 Diesel here is at $4.05 a gallon.
Are Oil Companies are angry about someone using bio diesel or water-4-fuel and eleritic car ??
Great discussion. I wonder what it will take for folks to change their driving habits and types of vehicles they drive...$5/gallon gas? Though Hawai'i (with gas over $4/gallon in many places) has the most energy- efficient vehicles on the road per capita, many over sized guzzling monster trucks, Hummers and SUV's are still present, although the free Hele-On bus is a great service and more folks seem to use it each week. What are we doing in Fairbanks to encourage folks to drive more efficient vehicles, use public transportation or ride a bicycle? In Anchorage a new group just formed called the Anchorage Bicycle Commuters Alliance. Maybe Fairbanks can start a similar group.
Hi there. The group's URL is Anchoragebicyclealliance.org . There's a group in Juneau, too... I'd heard that Fairbanks had one.
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