Gas Costs Rise, Set Record For This Time Of Year
U.S. gasoline prices have jumped to the highest levels ever for this time of year. The national average hit $3.127 per gallon on Friday, about 50 cents higher than a year ago.
The rise in gas pump prices has so far outpaced the increases seen in 2008. Gas prices began to soar in late February of that year, eventually hitting an all-time high of $4.11 per gallon in July.
While the dramatic price rise at the pump brings back memories of three years ago, when price spikes forced many drivers to join car pools and trade in gas-guzzling SUVs for more fuel-efficient cars, "it would be a mistake to think we're going to have that all over again," said OPIS chief oil analyst Tom Kloza.
Gasoline has climbed since November because of a temporary combination of forces that pushed energy prices higher; including stronger oil demand from China, a frigid winter in the U.S. and tension in Egypt, Kloza said.
The price of Brent crude, a key benchmark that influences U.S. gasoline prices, hit $100 per barrel in January for the first time since 2008.
"It was a perfect storm," said Kloza.
Kloza thinks crude demand will slide in the U.S. by May, as refineries slow fuel production while they switch to summer blends of gas. World oil consumption also may not rise as much as expected.
One of the biggest differences between now and 2008 is that oil traders are more cautious. After rising above $147 per barrel three years ago, oil prices tumbled to below $33 per barrel in 2009. The market remembers that, Kloza said, and even the most bullish traders no longer think they can chase commodity prices higher without risk.
Meanwhile, oil prices tumbled Friday after Egypt's President Hosni Mubarak handed over power to the military and left Cairo.
Benchmark West Texas Intermediate crude for March delivery fell $1.15 to settle at $85.58 a barrel on the New York Mercantile Exchange. That's lower than the price on Jan. 25, when the demonstrations in Egypt began.
Traders and investors have been concerned that the anti-government protests over the past 18 days could spread to other parts of the Middle East and disrupt oil supplies. Now that Mubarak has stepped down, the military says it will oversee a democratic transition to a new government.
"The market is getting whipsawed," oil analyst Stephen Schork said. "Everyone is playing the card that stability in Egypt is good for oil" shipments.
In other Nymex trading for March contracts, heating oil fell 1.49 cents to settle at $2.6958 per gallon and gasoline lost less than a penny to settle at $2.4652 per gallon. Natural gas lost 7.6 cents to settle at $3.910 per 1,000 cubic feet.
In London, Brent crude fell 50 cents to settle at $100.94 a barrel on the ICE Futures Exchange.