Gas prices might increase 24 cents
Fri Mar 4, 6:19 AM ET
Business - USATODAY.com
By James R. Healey, USA TODAY
Gasoline prices could rocket 24 cents a gallon the next few days, as stations across the USA scramble to keep up with big jumps in the prices of oil and wholesale gas, a veteran energy-price analyst forecast Thursday.
"It's going to be brutal, horrendous," says Peter Beutel, president of energy-price tracker Cameron Hanover. He has followed energy markets for nearly three decades.
Thursday, light, sweet crude oil for April delivery traded as high as $55.20 a barrel in New York before closing at $53.57.
A 24-cent jump in the price of gas would bump unleaded regular to a nationwide average of about $2.16 a gallon, blowing through last May's record of about $2.06. It could go higher as increased warm-weather driving in another two months pushes up demand, and therefore prices, forecasters say.
Adjusted for inflation, gas would have to hit about $2.95 for a record.
The price increase translates to "$90 million a day, every day that it remains in effect," which could be several months, Beutel says.
"Petronoia is in full flower. Retail gasoline has some 25 to 28 cents a gallon in increases ahead just to catch up to what has happened with wholesale (gas prices) since Christmas week," says Tom Kloza, senior analyst at the Oil Price Information Service. He foresees a record-breaking peak but not until the last half of this month. "What I can't determine is whether that level will last, like it did last year" or drop back as refineries ramp up gasoline production.
Petronoia is Kloza's description of when petroleum traders become irrationally afraid there won't be enough oil and gasoline later, so they buy now, bidding up prices.
The government's short-term-energy-price expert thinks the analysts are overreacting. Oil and wholesale gas prices have increased a lot, agrees Michael Burdette, senior analyst at the U.S. Energy Information Administration, but it takes about eight weeks for those changes to be completely reflected in pump prices. "In the next eight weeks, (wholesale gas) prices will change, so it's a moving target." At worst, he sees a dime jump in the near future.
Seasonal maintenance and other disruptions had U.S. refineries operating at just 89.3% capacity last week, lowest in four months, making traders jumpy about supplies.
The U.S. dollar has fallen in value recently, also, and foreign oil sellers, who control most supplies, want more dollars per barrel to compensate.
Those factors outweigh the U.S. government's midweek report showing ample supplies. U.S. inventories of crude oil, from which gasoline is made, were up a hefty 8.6% from a year ago and up 0.8% from the previous week. Supplies of gasoline were up 10.1% from a year ago, and even with a week ago. |
