Gas Prices Back at $3 a Gallon

Discussion in 'Economics' started by crgarcia, Dec 29, 2007.

  1. AP

    Gas Prices Back at $3 a Gallon

    Friday December 28, 3:23 pm ET

    By John Wilen, AP Business Writer

    Gas Prices Rise Back to $3 a Gallon, Following Oil's Recent Rally

    NEW YORK (AP) -- Gas prices rose back to $3 a gallon at the pump Friday, following rising futures prices on concerns about tight inventories and potential supply disruptions.

    But oil prices fell Friday, reversing earlier gains after weak figures on new home sales ignited fresh concerns about the economy. That gave traders a green light to lock in profits from oil's recent rally.

    Light, sweet crude for February delivery fell 62 cents to settle at $96 a barrel on the New York Mercantile Exchange. Despite Friday's swoon, oil prices have risen 5 percent in a little more than a week.

    Retail gas prices, which typically lag the futures market, are widely expected to rise to new record highs in the spring. Analysts think futures investors are anticipating big gains by buying now, driving futures -- and thus pump prices -- higher.

    "They're all jumping on the gasoline bandwagon," said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service, who predicts pump prices will peak between $3.50 and $3.75 a gallon in the spring. The Energy Information Administration recently predicted prices will peak above $3.40 a gallon.

    Kloza thinks gas prices will rise because refiners will again struggle to increase supplies in advance of peak summer driving season, raising concerns that there won't be enough to meet demand. Last May, prices hit all-time record of $3.227 a gallon amid a spate of unexpected refinery outages that kept supplies from growing as fast as many believed was necessary.

    "I do think refiners are going to have their typical ... struggles," said Kloza, who nonetheless believes they will produce enough gasoline and that the spring price spikes will be temporary.

    Gasoline futures for January delivery rose to a new trading record of $2.5175 a gallon Friday before retreating to settle down 3.65 cents at $2.4597 a gallon on the Nymex.

    Gasoline futures have been pushed to new records in recent days, in part by the Goldman Sachs Commodity Index's plan to boost its gasoline futures holdings next month. The $90 billion commodities fund, which is administered by Standard & Poor's, will boost its gasoline futures holdings by about $3 billion, from 1.37 percent to 4.55 percent of the fund, Kloza said.

    At the pump, prices rose 1.9 cents overnight to a national average of $3, according to AAA and the Oil Price Information Service. After retreating from their May record, gas prices rose again in November, spiking above $3.11 a gallon when oil prices last threatened to rise to $100 a barrel.

    Oil retreated from that lofty level as supplies appeared to be growing and demand seemed to be falling. But over the past several weeks, inventories have fallen domestically while demand has remained strong. Meanwhile, concerns about supply disruptions from the oil-rich Middle East have been fueled by Turkish attacks on Kurdish forces in northern Iraq and by Thursday's assassination of opposition leader Benazir Bhutto in Pakistan.

    But analysts believe the impact of the Bhutto assassination is fading. Meanwhile, several observers have raised concerns about Thursday's Energy Information Administration oil inventory report that showed inventories fell sharply last week.

    Phil Flynn, an analyst at Alaron Trading Corp. in Chicago, noted that several aspects of the EIA report don't add up, including the fact that imports jumped while overall inventories fell. It's possible that late reporting caused some vital inventory data to be missed in this week's report, meaning it could show up next week. Companies have an incentive to minimize oil inventories for year-end tax purposes, Flynn said.

    "To me, there's a lot of oil that seems to be unaccounted for," Flynn said.

    Other energy futures were mixed Friday. January heating oil futures fell 4.33 cents to settle at $2.637 a gallon on the Nymex, but February natural gas futures rose 18.6 cents to settle at $7.386 per 1,000 cubic feet. Natural gas supplies fell slightly more than expected last week.

    In London, February Brent crude fell 90 cents to settle at $93.88 a barrel on the ICE Futures exchange.

    Associated Press Writer Gillian Wong in Singapore contributed to this report.
  2. It is 3,25 in my neck of the woods (NYC):mad:
  3. the Oil Administration is throwing a party!
  4. Why the fuck do they keep saying that they are struggling to "meet" demand?

    That's bullshit. They have plenty of the shit.

    But...that's all the public needs to hear and they panic. Every time there's a story like that people start lining up at WalMart and other gas stations around here. It's pretty damn funny. Seriously.
  5. empee


    Maybe thats why they say it!

  6. Here in N. California when we get gas we hold up our hands high in the air...... $3.499 reg. $3.699 Pre.

    I wish they would get rid of that $0.009 shit! :mad: