Oil falls, but gasoline prices are still rising
Oil prices took a tumble, but the relentless rise in retail gasoline prices continued overnight.
The national average for a gallon of regular gasoline reached $3.833 Monday, according to the AAA Fuel Gauge Report, which is compiled by the Oil Price Information Service and Wright Express. That was 6.3 cents a gallon higher than the price one week ago, 29.1 cents a gallon higher than a month ago and 96.8 cents a gallon higher than a year ago.
Six states reported gasoline prices averaging more than $4 a gallon: Hawaii ($4.484), California ($4.203), Alaska, $4.179), Illinois ($4.073), Connecticut ($4.068) and New York ($4.018.)
In California, the price rose slightly from $4.202 a gallon overnight, but Monday's average still represents a jump of 23.5 cents a gallon since last month and of $1.093 a gallon since last year.
A similar rise in prices is expected to be shown when the Energy Department releases its weekly survey of retail fuel costs later today.
"A lot of people are saying that it feels like we're back in 2008," said Phill Flynn, an analyst for PFGBest Research in Chicago, referring to the all-time record high prices for crude oil, retail gasoline and diesel reached in the summer of 2008. "But this is different. Now, we see oil doesn't have to be near the high mark of $147 or $148 a barrel for gasoline to be closing in on a new record, and we're going to come close to a new record."
European Brent crude for June fell $1.81 to $121.64 a barrel. In New York, crude oil futures for May delivery fell $2.42 to $107.24.
Meanwhile, the Organization of the Petroleum Exporting Countries finally seemed to be acknowledging that high crude prices were beginning to strain world economies.
Speaking in Kuwait, Saudi Oil Minister Ali al-Naimi said that the global economic recovery "remains patchy; in many countries unemployment remains at unacceptable levels." Kuwait Oil Minister Sheikh Ahmad al-Abdullah al-Sabah, said, "At these high price levels, spending on oil imports could represent a significant economic burden."
But OPEC is not scheduled to reassess its output levels till June. That's too long to wait, said Flynn.
"OPEC needs to pump more oil now," Flynn said.
The new monthly oil report by the London-based Center for Global Energy Studies said that OPEC had failed to replace all of the oil lost from Libya in the continuing fight between rebels and supporters of longtime Libyan leader Moammar Kadafi "leaving supplies down by 1 million barrels a day."
The center said that oil producers were risking a repeat of the spike in oil prices in 2008, which helped worsen the global recession.
"The similarities with the same period in 2008 are worrying," the center's report said. "Then, oil producers struggled to keep pace with rapidly growing oil demand in the developing world, while the oil supply chain was stretched right along its length. Now, although demand growth is more moderate, producers have again been slow to respond, while the conflict in Libya has removed close to 1.5 mbpd [million barrels per day] of supply, most of which has not been replaced."
-- Ronald D. White