Gas prices close in on record
Gasoline prices were poised yesterday to set a new record at the pump, having surged to within half a cent of their record high of $3.227 a gallon. Diesel fuel, meanwhile, surged above $4 a gallon in the Philadelphia area, while crude oil rose above $108 a barrel to a new inflation-adjusted record.
Gasoline prices were poised yesterday to set a new record at the pump, having surged to within half a cent of their record high of $3.227 a gallon. Diesel fuel, meanwhile, surged above $4 a gallon in the Philadelphia area, while crude oil rose above $108 a barrel to a new inflation-adjusted record.
It was oil's fifth new high in the last six sessions on an upbeat report on wholesale inventories.
The national average price of a gallon of gas rose 0.7 cents overnight to $3.222 a gallon, 69 cents higher than one year ago, according to AAA and the Oil Price Information Service. Last May, prices peaked at $3.227 as surging demand and a string of refinery outages raised concerns about supplies.
That record will likely be left in the dust soon as gas prices accelerate toward levels that could approach $4 a gallon, though most analysts believe prices will peak below that psychologically significant mark. In its last forecast, released last month, the Energy Department said prices would likely peak around $3.40 a gallon this spring; a new forecast is due today.
In Southeastern Pennsylvania yesterday, gasoline rose by a penny a gallon to an average of $3.18, AAA said. Diesel was up 7 cents a gallon since Friday, to a record average of $4.03 in Philadelphia and the four suburban counties. In South Jersey, gasoline held steady at Sunday's average of $2.98 a gallon, but diesel averaged $3.80 - up 11 cents over the weekend, the auto club said.
Retail gas prices are following crude oil, which has jumped 25 percent in one month. Yesterday, crude prices surged to yet another record after the Commerce Department said wholesale sales jumped by 2.7 percent in January, their biggest increase in four years, according to Dow Jones Newswires.
The strong sales report suggested to oil traders that the struggling economy may be doing better than thought.
Light, sweet crude for April delivery rose $2.75 to settle at a record $107.90 on the New York Mercantile Exchange after earlier setting a new trading record of $108.21.
Energy investors shrugged off a relative stabilization of the dollar, and a cooling in tensions between Venezuela and its neighbors Colombia and Ecuador.
Many analysts believe speculative investing attracted by the weak dollar is the primary reason oil has risen so far so fast in recent months. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.
"We've got a Fed meeting on the 18th that could see a sizable rate cut," said Brad Samples, an analyst with Summit Energy Services Inc. in Louisville, Ky. "So, it's not over."
Other energy futures also rose yesterday. April heating-oil futures rose 2.64 cents to settle at $2.9734 a gallon while April gasoline futures rose 2.06 cents to settle at $2.7149 a gallon.
April natural-gas futures jumped 25.5 cents to $10.024 per 1,000 cubic feet, the first time a natural-gas contract has closed above $10 since January 2006. Natural gas was following oil higher, but also rising in anticipation of cooler temperatures across the Midwest and Northeast, analysts said.
In London, Brent crude futures rose $1.78 to $104.16 a barrel on the ICE Futures exchange.