Gas tops $3.83 as early holiday travelers hit road

NEW YORK — Americans getting an early start on the Memorial Day weekend found that gasoline prices again sprinted to a new record high overnight, reaching a national average above $3.83 a gallon. Some analysts predict gas will break past $4 as early as next week.

Oil prices, meanwhile, fell Thursday after setting a new trading record of $135.09 overnight. A stronger dollar gave some investors reason to sell oil futures to lock in profits from crude's record run. But concerns about falling supplies and rising demand are expected to keep propelling prices higher in the days and weeks to come.

Oil's surge is contributing directly to the pain consumers feel every time they fill up. At the pump, the average national price of a gallon of regular gas rose 2.4 cents overnight to $3.831, according to a survey of stations by AAA and the Oil Price Information Service. Prices are 61 cents higher than a year ago.

Unlike last year, oil prices are setting new record highs on a daily basis. That's pushing gas prices higher, and analysts see no reason for gas not to follow.

"We're going to blast past $4," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

Prices may rise as high as $3.90 on a national basis by this weekend, he said. Prices are already above $4 a gallon at many stations around the country, and are averaging more than $4 in California, New York and Illinois, among other states.

Oil prices rose to $135.09 a barrel in overnight electronic trading on the New York Mercantile Exchange before retreating to settle down $2.36 at $130.81 a barrel by afternoon in New York.

Analysts said oil futures are caught between the supply and demand concerns that boosted crude to its latest record, and a desire by some investors to cash in some profits. The dollar, one of the factors that has fed oil's rally from about $65 a year ago, strengthened against the euro Thursday. When the greenback gains ground, commodities such as oil lose their value as hedges against inflation. Also, a stronger dollar makes oil more expensive to investors overseas.

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At times in a price runup that's added nearly $9 to a price of crude this week, and almost $16 over the past month, investors will sell to take profits, analysts said. Crude rose $4.19 a barrel on Wednesday alone.

The Paris-based International Energy Agency on Thursday said it is worried about whether there is enough oil to meet global demand, and is working on a review of the world's 400 largest oil fields that could lead to a major revision in its closely-watched forecasts.

"The market is really structurally tight ... oil demand is not growing that fast but supply is constrained," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Some analysts say crude has been boosted in recent days by especially strong demand for diesel in China, where power plants in some areas are running desperately short of coal after last week's earthquake, Kevin Norrish, an analyst with Barclays Capital PLC, said new data from China shows demand for diesel was already rising quickly before the disaster. Chinese diesel imports rose 9.2 percent in April compared to last year, Norrish wrote.

Still, many analysts argue that oil prices have risen far beyond levels that can be justified by supply and demand. This school of thought believes the dollar's decline has attracted speculators to oil and other commodities, artificially inflating prices. Some analysts see signs in the prices differences between the current July crude contract and contracts for delivery in future months that could mean oil prices are set to decline in coming months.

In other Nymex trading Thursday, June heating oil futures rose 4.59 cents to settle at a record $3.9543 a gallon after earlier rising to a trading record of $4.0153. Heating oil, which is closely related to diesel, is often traded as a proxy for diesel.

June gasoline futures fell 6.68 cents to settle at $3.3297 a gallon after rising earlier to their own trading record of $3.438. June natural gas futures rose 5.7 cents to settle at $11.697 per 1,000 cubic feet. The Energy Department said natural gas inventories rose last week by 85 billion cubic feet, in line with analyst estimates.

In London, July Brent crude futures fell $2.19 to settle at $130.51 a barrel on the ICE Futures Exchange.

___

Associated Press Writer Pablo Gorondi in Budapest and AP Business Writer Thomas Hogue in Bangkok, Thailand, contributed to this report.

Comments

[KillTheMessenger]

Prices are pretty arbitrary. They don't say much about the value of something but they speak volumes about the vanity of the buyer. Just look at jewelery diamonds and pearls. What will be more interesting to watch is how much consumption will come down after the summer driving season and year over year. Personally I have a hunch that America, if forced to conserve, can lower its transportation fuel consumption by as much as maybe 4% a year. I don't think this will happen at $4/gallon, yet, but we will probably get a better data point for what is possible than we have in the past.

[rkrenke]

The Bush Administration and oil execs are working together to skyrocket costs so they can force Congress and the American people to accept drilling in the Arctic Refuge and other pristine areas of the U.S. before the end of Bush's term.

Disaster capitalism - alive and well in the USA!

[UnbiasView]

Do you have any proof of that?

BTW, what's wrong with drilling for our own oil instead of dealing with the Irans and Venezulas of the world? 80-90% of all oil is nationalized by countries and many have decided to export less and keep more for themselves . . . it's about time we did the same.

[trollsbwild]

The info we have says they are making record profits. Why can't they reduce margins as a reasonable sacrifice during a time of war?
All of th eother Bs they talk about bears no realtion to their obscene botom lines.

[TxAggie]

UnbiasView-Over 50,000 wells have been drilled in the central and western gulf of mexico planning areas but practically zip in the Eastern Gulf due to mortoria. I suggest you go to WWW.IPAA.O­RG- the Independent Petroleum Association of America, use their search vehicle you will find testimony, maps, papers, etc showing the areas off limits to oil and gas exlploration. You might google the American petroleum Institute as well. Please read and spread the word on what you learn. thanks,

[chicago25624]

And why aren't you screaming about taxes on that gallon of gas?

Chicago 79.2 cents per gal tax
LA 77 cents per gal
New York 69 cents per gal.

China Cuba and Mexico drilling off the Florida coast, but we can't. ANWR sitting unused, but we can't drill there.

Imagine taking all of that money we send to OPEC and keeping it right here. Imagine how many tax dollars you liberals have let slip through your fingers by keeping us from getting our OWN oil.

Keep it up Exxon, BP, MEXCO, FPP, EMP. Keep making me money.

[UnbiasView]

In the liberal mind:

Government is good

Business is bad

[freshnotbitter]

Speculation is a bet that something is going to happen and it is a pretty good bet that China and India will demand huge quantities of oil in the future. So why should anybody sell a barrel of oil today for $50/60 if they can get $200 in the future? maybe that's why they call it a "futures market", right?

It sure is weird to see all the sesame seeds suddenly bursting at the seams with rage when I thought all along that they wanted to consume less carbon based fossil fuel. Well, just consume less and you are all set.


Try this article from Salon, hardly your vast right wing conspiracy mouthpiece:
http://www.salon.com/tech/htww/2008/05/22/wall_street_journal_peak_oil/index.html?source=rss&aim=/tech/htww

[UnbiasView]

"pretty good bet that China and India will demand huge quantities of oil in the future"

That's why China is drilling 50-90 miles off the coast of Florida, they know they will need more so they go get it while we wave at them from US waters doing nothing.

[KillTheMessenger]

You are aware that oil wells are NOT like an underground lake, right? They are more like a sponge. Oil only flows so far from the rock to the wellhead. So you need to be close to the area that you want to produce. Which means that if you want that oil from the site where the Chinese are drilling, you need a contract with Cuba.

[philosopherkingtomas]

How to drastically LOWER gas costs:

First thing get rid of Bush-Cheney-McCain!
When Bush first ran for president in 2000, he criticized the Clinton administration for high fuel prices and said the president must "jawbone" oil producing nations and persuade them to drop rates. At that time, oil was nearing $28 a barrel

Second, tell Saudi to put extra 1 million bbls on the market or pay for their free security provided by USA taxpayers at $50 billion a year.
Increase Iraq oil production, pay USA back the $500 billion "invested" to bring them "freedom"
Increase value of the Dollar
Import CHEAP Brazilian alcohol for three year periods ($1 per gallon).
Force the airline industry to build their own coal to diesel plants, here or in Mexico.

Get out of Iraq, force a fair solution for Palestine.

This will drop prices to $60 per bbl and still encourage development, oil shae, coal to oil.

The Texans have ruled too long.

[UnbiasView]

Got any idea of how to get any of those done?

[KillTheMessenger]

No, of course not. But his points SOUND good in a blog. And that is all he really cares about. Just like the rest of us. Take me, for instance. I have already done my thing to evade the worst consequences of peak oil: I am riding the bus and own a hybrid. I am good until gas goes to about $25/gallon. So with all the money I save I can buy myself the time to write stuff on Huffpost and sleep well. :-)

[kappa08]

Can you say private security force? They can and better...

[DTodd62]

Interestin­g....
Someone said that this is an old vid but by god something needs to be done

http://www.youtube.com/watch?v=6Rb_rDkwGnU&feature=email

[pbfishtaco]

Woooohooooo!

[SwingingFromCenter]

The solution to this problem isn't to raise the price of gas to 8 dollars (like extreme left wing nutjobs want)

The solution to the problem isn't to start drilling ANWAR (like extreme right wing nutjobs want)..

The solution is to either force the oil industry to build more refineries, or else start a state-run oil company that WILL build refineries, increase refining capacity, and help drive down market rates. Supplies aren't what drive oil prices up. That's just a buzzword and convenient excuse for Wall Street speculators to justify pushing prices higher to get rich off the back of the middle class.

Refining capacity is the problem. Not enough refineries. And what's worse is the oil companies over the last few years have actually SHUT DOWN perfectly good refineries in order to drive prices up. Oil companies whine that they're expensive--well, they're making the money hand over fist right now. If you don't wanna go that route, fine, tax the hell out of them and have the government build some. Call it a public works project. It will stimulate the ecnoomy and drive prices down, but will create jobs.

Look at the future plans for big oil. Not ONE of them has plans to build even asingle new refinery in the next 5 years. They plan on doing NOTHING to improve infrastructure. THat's the problem. Not consumption. Not growing world demand. Not "worries" over Nigerian rebels.

[Chavez08]

"The solution is to either force the oil industry to build more refineries, or else start a state-run oil company that WILL build refineries, increase refining capacity, and help drive down market rates. Supplies aren't what drive oil prices up. That's just a buzzword and convenient excuse for Wall Street speculators to justify pushing prices higher to get rich off the back of the middle class."

You're missing the point. Gauging S&D, the legitmate price of a barrel is $50-$60. The current price has very, very little (or nothing) to do with actual supply and almost everything to do with the manipulation of production and Wallstreet speculative fraud:

"We analysts noticed that an 80 year old Kuwaiti fruit peddler looked grumpy this morning...­..raise it to $135 a barrel"

[SwingingFromCenter]

No, I have the point--I said as much (originally, I had to pare down my message because it was too long for HuffPo guidelines, and since my argument was for refining, market manipulation had to get cut).

It's well-known that these prices get driven higher by Wall Street traders who go and say things like "fear about supplies in Niger" or "Fears about supply interruptions due to a hurricane that might hit" or "fears of supply interruptions because of (insert random event here)".

And then when the event never transpires and the "fear" is alleviated, what happens? Nothing. There's no market correction. It's as though it's ongoing, even though the "threat" has passed. The next "fear" just gets tacked on to it.

But still--increase refining capacity and the "supply concerns" argument loses its legs entirely, because it would be showing that stockpiles of refined gasoline are high.

[Chavez08]

Sorry,

Responded to the wrong comment.

[DTodd62]

As far as a refining solution, the environmental aspect is the real hangup. Face it, it can be done cleaner now and needs to be. The location is another aspect. and the answer to that is simple. Retired military bases. They are already toxic waste sites with wide perimeters.

[SwingingFromCenter]

Environmental concerns I agree need to be addressed--on the consumer side. Yeah, refineries belch out more than they could/should. But not nearly as much as the army of Suburbans and H2's that have one person in them that roll around the city streets all day long.

Location is an empty suit argument, in my opinion. Yeah, there's the whole "not in my backyard" sentiment, but has anyone who makes that argument actually TRAVELED this country? We've got so much empty, open space that we could be a thousand refineries down (when in actuality we only need about 7 more) and nobody would ever be anywhere near any of them. Anyone who's ever driven through Nebraska, North Dakota, or Wyoming can probably think of about a hundred different great locations just off the tops of their heads.

[KillTheMessenger]

Refineries are running on really low utilization. So what would building more of them achieve? Run them on even lower utilization like 50% instead of 85%?

I can't even begin to fathom what logic lies behind your idea... it for sure is not Boolean.

[OneVoiceInACrowd]

He would be using the NOR operand

[SwingingFromCenter]

Ya know, I started to form a response to you...and then I saw your user name and remembered that you never post anything but tripe and probably do so knowingly, so forming a reasoned response to this nonsense is probably just going to bait you even more. Move along.

[UnbiasView]

If so why is the USA importing more finished gasoline than ever before?

[calgary]

Relax everybody. If gas goes to $10, there will be cars that get 70 miles per gallon. Your annual gas cost will be less than a car getting 20 mpg at $3 per gallon. Virtually all the car makers are designing cars that will get at least 40+ mpg in the next few years. Yeah, big SUVs and pickups will be confined to businesses and people that really have a need for them and not just for looks and ego. People, businesess, and government will find ways to adjust and it will not be an end of the world scenerio. On the supply side, there will be more oil to be discovered.

[geobushono]

thanks for the easy answer, now tell us, how about that semi w/80,000# on board?
and how about UPS, USPS. etc.
..and how about the plumber w/5,000# in tools in his truck
do I need to continue or do you see this theft really is turning our whole Nation into landless peasants in ONE GENERATION­........I( DO see a problem.
...and as ED Schultz mentioned today "Venezuelans are paying 12 cents/gal, AND healthcare­."
Nationalize OIL....it belongs to us.

[PierreLeClerke]

B I N G O

[KillTheMessenger]

"Nationalize OIL....it belongs to us."

Not the oil in Saudi Arabia's soil. Or that in Nigeria. Or Venezuela. Or Mexico. Or Canada. Or... basically anywhere where there is still a lot of it left.

[Rule Of Law]

Yes, and since 1970 when they capped those wells to get the cheaper and easier to pump Arabian oil, it has just sat there--on our lands. The impact of these higher prices will radiate throughout our entire society this summer. Folks who once thought nothing of driving the family 2 or 3 hours to some park or event or similar tourist attraction, will stay home and see a movie instead. And all those businesses that rely on cheap gas to get people to them--Gone! And the jobs the provided--Gone! And the groceries and bright shiny things that those formerly employed folks used to buy--Not any more. And so more lost jobs etc etc. If the plan is to reduce us to serf status, it's working.

[calgary]

You are right that there are no easy answers which I was not trying to imply but it is not the end of the world either. However there are many answers such as did you know that only 30% of the energy produced by an engine actually goes to powering the car. The rest is wasted on friction and heat. Yes, the whole world and particular us have taken cheap oil price for granted and build an infrastucture and a way of life that depended on cheap gas. The transition will be painful but ultimately will further improve our way of life. I remember my history lesson that the two losing countries in WWII who had their infrastructure totally destroyed and had to rebuild from the ground up turned out to be much better for them. People worked harder and together which might be a good thing for our country. This is the test of our generation, are we all just going to cry, complain, and blame or are we going to pull together as a nation to leap frog us into the future?

[shockmagog]

That's a relief--and here I was worried over nothing.

[KillTheMessenger]

With a 47+ mpg Prius gasoline at $15/gallon is economically quite feasible because it comes out to 30 cents/mile. But we are a long ways from there.

[lungfish]

This is profiteering, pure and simple. The oil companies are screwing the hell out of us just like Enron and co did back in 2001.
These industries should be regulated, taxed to death and the architects of this robbery need to be brought to account. You can bet Cheney and co are at the bottom of it...

[Mike169]

Too bad the country doesn't run on bullshit we could harness the Republican Party and solve all our energy needs.

[Tom95134]

"... Europe’s biggest airline, Air France-KLM, warned of a profound reshaping of the world airline industry ..." Read this as a drastic reduction in flights. Airlines are already sidelining their less efficient jets which is causing a shortage of seat-miles.

This is more significant in the U.S. because in Europe there is a well developed rail travel network that can absorb travelers unable to get seats on flights or to afford higher airfares. In the U.S. we ARE SCREWED because Congress has consistently underfunded Amtrak and we have almost no intercity rail travel. Amtrak typically runs fully booked (even though they don't make money) and have very little rolling stock that they can use to absorb more passengers.

[SwingingFromCenter]

Amtrak shouldn't be getting Federal funding. Ever priced a ticket to ride the rails? It's oftentimes more expensive than just getting on a plane. I don't know what Amtrak does with all the money to where it loses so much cash, but there's something wrong with their business model.

Course, it's something of a self-fulfilling prophecy as well--since it's so expensive to ride the rail, nobody rides it.

[shockmagog]

Your wish to make things worse than they already are baffles me. Look where we are now with the federal attrition "subsidies" we now have. Look at the difference between what Europe has and what the United States has in terms of rail transportation. The proof is in the pudding.

[Paul]

Gasoline needs to be $8/gal like it is in Europe.

We should tax imported oil to keep the price high enough and long enough to permanently destroy demand for cheap energy in this country. That means no more SUVs, and no more suburbs.

Rebuild the cities, create a 21st century mass transit system and we can kiss the middle east and Exxon goodbye.

[EinChicago]

And by squeezing everyone into teh cities, we can take any potential savings and massively outspend it on increased law enforcement and other issues from the crime that would go hand in hand with it. Great idea. No really. Great idea. Maybe we could also all cut off out left hands to cut down on wind resistance as we walk. It'll be about as productive.

[TocinoHumano]

"Maybe we could also all cut off out left hands to cut down on wind resistance as we walk."

Well, there goes my brilliant career as a concert cellist.

[Paul]

Crime only became an issue in the cities when people started moving to the suburbs.

The reverse will happen - all the crime will be out in the rural areas where the poor people will be living.

[Mike169]

It would be nice if someone in this benighted administration would even mention something as "outrageous" as mass transit. In the mean time most places don't even have a bus system that works.

[thegreatgiginthesky]

The US is so behind the curve on mass transit it isn't even funny. Even 3rd world nations have mass transit systems better than what the US has.

[Tom95134]

We do need to become more realistic about gas pricing. Europe has a high tax component to their gasoline and uses that to subsidize their excellent public and rail transportation systems. I would be willing to pay an added $2~3 gas tax if it meant we would use it to revitalize our public transportation systems and long haul passenger rail systems. Airline flights are already reduced and airlines scrapping less efficient planes. In Europe their rail systems will pick up the slack.

Cheap solar energy can be used as a power source to revitalize the intercity rail transportation system here but no company will undertake the kind of projects that are being proposed in Europe. Government MUST step in and fund a Manhattan type project to develop concentrated solar tower collection sites and ultra-high voltage DC transmission systems. Even T. Boone Pickens sees the hand writing on the wall. He is making a massive investment in a wind farm in Texas by buying 667 wind turbines.

[MilwaukeeDan]

Paul, here, we can't even afford to patch the potholes from this winter, rebuild the cities, that might cost a few bucks. Europeans pay in Euros by the way, their currency is not pegged to the dollar.

[Paul]

Our currency is on the oil standard - we have to pay whatever it takes to get the energy we are cusing right now.

[vippy]

If we adapt the $ 8 or $ 9 gasoline as in Europe then we have to pay the US Worker the same
wage as they receive in Germany along with all their benefits. Europe has the highest living
standard and you cannot compare the US with them. What distorts some figures is the immense
income of individuals when averaged out. Who but the US has less than a fulltime workweek.
Not even parttime but intermittents, who work anywhere from 3 to 19 hours per week. At that
rate you need more than 3 jobs to make up for the difference and gas prices won't allow that.
Welcome to the new 3rd World.

[ajax2]

Are these the same guys who perjured themselves on tobacco?

[MilwaukeeDan]

Wow, so many great theories on why we have $135/ barrel oil. The problem/reality is, my 4 banger runs on gasoline not theories, which the guy at the Marathon station wants $3.99/gall­on for 87 octane. Public transportation is non-existant in the burbs of MKE and although I live close(4 miles) to work, riding a bike is only good for about 60 days a year due to weather. Just like the war in Iraq, we can sit and argue until we are blue in the face, it doesn't matter, it's bigger than all of us. The middle class and the poor have been taking one in the kazoo for about 30 years now, nothing changes, just Huffpo lets you went some anger.

[Mike169]

Kazoo?

[Rule Of Law]

It's near MKE! (sorry Dan, I couldn't resist...)