Pump prices climb as oil extends gains
An AAA analyst expects gas to average $4 nationwide soon.
NEW YORK (AP) — Oil prices soared to yet another new closing high Monday while prices at the pump struck records of their own, tightening the squeeze on drivers planning holiday road trips next weekend.
Light, sweet crude for June delivery jumped 76 cents to settle at a record $127.05 a barrel on the New York Mercantile Exchange. Prices rallied late at one point in the session to within a nickel of Friday’s record trading high near $128 a barrel.
Americans are now paying an average of $3.79 for a gallon of regular gas, according to a survey by AAA and the Oil Price Information Service. Diesel, used to transport a wide range of goods, now costs $4.52 a gallon. Those prices are likely to keep rising, following crude’s upward track.
Drivers in some parts of the country are paying considerably more than the average, however. Gas pump prices in parts of California have been stuck above $4 a gallon for weeks now, although the statewide average is down to $3.96. Prices in Alaska and Connecticut are averaging just above $4 a gallon.
Those rising prices — which compare with a national average of about $3.23 a year ago — are putting a strain on family finances.
Jeanne Prows of West Chester, Ohio, said she and her husband are considering riding to work together to save on gas. Prices in their suburban community near Cincinnati are hovering near the national average.
“We really don’t have the extra cash this summer,” she said.
A report released Sunday showed retail prices topped an average $4 a gallon for the first time in two metropolitan areas: Chicago and New York’s Long Island. The Lundberg Survey of 7,000 stations nationwide found the cheapest city to be Tucson, Ariz., where a gallon of regular sold for $3.48 on average.
Pump prices may still have further to go, pressured by rising oil costs and soaring global demand.
“We’re looking at $4 a gallon [nationwide] once we get past Memorial Day and into June, given the oil prices we’re seeing today,” said Geoff Sundstrom, fuel price analyst at AAA.
Oil prices were boosted Monday by a report that the Organization of Petroleum Exporting Countries would not increase production before its next meeting Sept. 9.
Algerian Energy Minister Chakib Khelil, the current OPEC president, was quoted in government newspaper El Moudjahid as saying that “current prices aren’t linked to the law of supply and demand.”
The announcement came days after Saudi Arabia’s oil minister said the kingdom, the world’s largest oil producer, had increased production by 300,000 barrels a day earlier this month.
Although the response in the trading pits to that move was tepid, the modest increase should nonetheless help grease a tight global market, said John Felmy, chief economist for the American Petroleum Institute, the industry’s leading U.S. trade group.
“Certainly seeing increased production is helpful in terms of increased supplies,” Felmy said.
Meanwhile, Holly Corp. said a key unit at its New Mexico refinery was shut down for repairs, cutting estimated May gasoline production by as much as 756,000 gallons per day. The shutdown occurred while the fluid catalytic cracking unit was being brought back online from a previous shutdown May 7.
The refinery in Artesia, N.M., is Holly’s largest, but the outage is unlikely to significantly affect fuel prices, said Jim Ritterbusch, president of oil trading advisory firm Ritterbusch Associates.