Oil falls, but expect more price pain at the gas pump today
Oil prices were falling Monday as Libyan leader Moammar Kadafi was said to have accepted a plan by a delegation of African leaders for ending the bloody conflict that has pit his forces against rebels determined to end his rule. But motorists at the retail end of the fuel chain will likely feel another twinge of pain at the pump when the Energy Department releases its weekly survey of prices nationwide later in the day.
Crude oil futures for May delivery were down $2.06 at $110.73 a barrel in trading on the New York Mercantile Exchange after rising as high as $113.46 a barrel, the highest level since September 2008. In London, Brent crude gave up $1.57 at $124.55 a barrel on the ICE Futures exchange.
But retail gasoline prices have been on a relentless upward march since September. Some analysts think the increases will reach an average of $4 nationally and go much higher than that in some states, including California. Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey, recently raised his prediction of a high of $3.75 a gallon for a national average to $4, which he said would have severe economic repercussions.
"I maintain my view that if the U.S. economy sees $4 a gallon for an extended period of time there will be some dire consequences for the consumer economy," Kloza said.
Kloza said the nation's drivers would be spending about $42.5 billion a month on gasoline with a national average of $3.75 a gallon. At $4 a gallon, the bill rises to $47 billion. In July 2008, when retail gasoline prices reached an all-time record, drivers spent about $50 billion on gasoline.
Kloza's company conducts its own price survey, with the help of Wright Express, at more than 100,000 retail outlets across the nation. That survey found that the national average had risen another penny overnight to $3.77 a gallon.
Three states -- Hawaii, California and Alaska -- are already well above $4 a gallon, on average. California's average rose a penny overnight to $4.159 a gallon, but in some parts of Los Angeles, such as the Shell station on Olympic Boulevard at Grand Avenue, regular gasoline was listed at $4.559 a gallon.
Other states, such as Illinois, were about to join the dubious $4 a gallon club, thanks in part to the shutdown of the Midwest's biggest refinery -- BP's facility in Whiting, Ind. -- for about two months, according to Patrick DeHaan, senior petroleum analyst for the nationwide system of retail gasoline price reporting websites, GasBuddy.com.
"It makes about 410,000 barrels a day when it's operating. The shutdown is pushing up prices in Illinois, Indiana and other parts of the Midwest. Prices are at $3.99 a gallon at a majority of retail outlets in Michigan as well," DeHaan said.
-- Ronald D. White
Chart: Gasoline prices have been rising steadily since October in California and nationally. Credit: AAA Fuel Gauge Report.