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.

Story continues below

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

[Raymondf]

Build refiniries, and drill in Anwar. Start today in the mean time do what I do. Don't go anywhere I go to the doctors, I have 3, I make my appointments so they are on the same day, their all at the VA hospital. Go to the grocery store once a month insread of once a week, or once every two weeks. If you take a vacation stay home for it instead of traveling, I have saved 1500.00 on fuel since January 1st. If you need Bread, milk,or beer you know the staples, stop on your way home from work. If you are retired like me it can be done. If you want to travel on a vacation, take shorter trips within no more than 4 hours from your home, shop for the cheapest places to buy gas, don't let your tank get below 3/4 of a tank it will save on gas mileage, because a full tank don't us as much gas, and your not maxing your wallet. I have no credit cards, because they make things to easy. If you don't have cash don't go.

[thegreatgiginthesky]

One small problem with your "solution", not everyone is like you.

[Raymondf]

No but you really can cut back if you try hard enough. I know its hard to do for people that work, but if you can carpool do so if not don't let your tank get below 3/4 of a tank, just try it you will see you can save if you want to .

[Tom95134]

Takes too long to bring ANWAR online and the size of the reserve doesn't justify it. We'd be better off building concentrated solar tower energy generation systems like those being planned for Europe and revitalizing our energy grid to handle ultra-high voltage DC.

[TxAggie]

Anwar is a piece of the puzzle, open the OCS to unfettered exploration. Drill offshore CA and FLA. Keep the royalties here in the usa, create jobs, gurarantee a stead y supply of american raw product. We need to consistently drill and develop our own reserves while developing new technology and efficiences. ANd feed the damn corn to cattle and make fritos out of it instead of running the price of food up.

[CHARLESTHETENTH]

Greed, Greed, Greed!! Don't put all the blame on the Oil Companies..our own Car companies like Ford and GM have been shoveling large trucks, vans, and powerful cars to the consumer for years. They really never made a conscious effort to conserve this natural resource. Only now they are making changes because the economy and soaring gas prices demand it. They have all committed a disservice to this country and the people. Car companies like Toyota started years ago with Hybrids so there is no excuse for our own Domestic companies not to have done the same. However, bigger cars mean more profit for the car companies and , more fuel to burn which profits the Oil companies. Looks more like a conspiracy among them for profit....and the American people lose...and in the end we all lose. Greed took over for conscience with little concern for future generations...Oil is a resource that we won't have forever and the time to conserve must be now. That is something the American people were never conditioned for but many have no choice. ...and still Car companies are pushing the large Suvs, Trucks, Rvs haulers and powerful cars because their inventory is overflowing with these Greed vehicles. We must all do our part in conserving this natural resource and there are many ways to make that happen. The time is now!!

[EinChicago]

Yeah. Those mean ol US car companies, not like saintly toyota who never made or sold anything like the Sequioa, the Land Cruiser, the FJ cruiser, the Tacoma, the Tundra, the Lexus LX, teh Lexus GX or anything. They've only ever built cars that get a gajillion miles to the gallon and run on lovbe and flowers, right?

[MilwaukeeDan]

Chuck, please, Toyota has the Prius, but all their cars and trucks are heavier and bigger, with bigger engines than the previous models, a new Corolla is the size of a 15 year old Camry. The original Camry had a 115(?) hp 4 cylinder, the new one a 260hp V-6.They spend millions shilling their 385 hp FULL size pick up. GM tried some things in California some years back with electric cars but it was a failure due to no demand. With that said, Toyota, Ford, GM(Opel) and others have some great economical small diesel powered cars they sell in Europe and elsewhere. Why they can't/won't import them here is another 20 paragraphs.

[Tom95134]

Not 20 paragraphs. Just one line. Americans want big cars because they've never really had to pay the real price of gasoline. It's time we woke up and recognized that driving a SUV or HUMMER just doesn't make sense if you have not need for it.

I love my Prius. :)

[ajax2]

AP 5/22/08
'Many investors believe the dollar's protracted decline over the past year has been the most significant factor behind oil's rise from about $66 a barrel a year ago.'

[mellene]

We have no one else to thank for this but the Bush administration. If they'd stayed out of Iraq this would have never happened. Crude might still be between $30 and $50 a barrel. What else can the American public expect from two oil guys.

[Hoelder]

De - Regulation does not work. The President, an Oil man, the VP, also an Oil Man, could not be interested in low oil prices. That would cut into the profits of their oil buddies.

[EinChicago]

Bush was appointed by Big Oil in 2000 for three specific purposes: (a) repeal Kyoto, (b) get the oil in Iraq open to western leases and (c) open up ANWR and the coastal oil reserves.

He managed a, attempted and looked like he was a long way towards b before everything collapsed in iraq, but has made absolutely no headway on c. What we're seeing now is the last big push to try and pressure public opinion into allowing him to do c before his tim eruns up in November. Th eGOP have nothing to lose, Cheney is not running, McCain is the sacrifiial lamb intended to lose to Obama so that a GOP president can "rescue us" from Obama's 4 year Jimmy Carter type stint as a scapegoat for the past 8 years of misrule in 2012. Prices are going to go insanely high over teh next few months and then burst like the mother of all bubbles in teh fall when Bush runs out of time.

[AnnArky]

So, once again, to appease the dumb ones, Congress parades out the oil company's dog-and-pony show to make it look like they actually care and are really doing something about it. Let's just admit it, America is asleep at the wheel, government has some secret agenda that doesn't include the rest of us and BIG oil could really give a shit. When America's economic infrastructure begins to really collapse because of the rising cost of oil (due entirely to George's Folly) I'm sure we'll get to watch congressional reruns of these dubious hearings. In this day and age, on this planet, I think it's time to reconsider the profit motive as all it seems to achieve is money & power for some and debt and misery for others - yeah, that makes a whole lot of sense.

[speakingtruth2power]

Up in NW Ca., behind the Redwood Curtain, we have always had high gas prices.

We occasionally have investigations about collusion driving up the price but they

always have their proof (?) at the ready, showing how it is otherwise. They always

have good lawyers who always end up as our judges, there to hear the next case.

Around the world, the more things change, the more they stay the same, always.

[Raymondf]

Thats exactly why I have said no matter who gets elected nothing will change if we pull out of Iraq oil will go to 200.00 dollars a barrel by 2010, so no matter what we do there will be no change, until we get a recession or we find other alternatives, coal is plentiful and we already have the tecnology to refine it into fuel that would be 1/2 of what we are paying now. corn, or grain won't work, because that just drives up food prices, because there a lot of things made from the two. We need to tell the environmentalist to stick it, and drill in Anwar, more off shore drilling, and build 10 to 15 new refineries. There is a device being sold right now that will run your car on water. It is being sold on the Internet, don't remember the address now but I have it saved in my file waiting for my monthly retirement check to buy one. a mechanic can install it one hour, heres the best part right now it is selling for 59.95 but soon will go to 300.00.

[TxAggie]

Let's discuss the truth. California doesn't want refineries, doesn't allow onshore drilling during horney toad mating season and refuses to allow development of billions of barrels of proven reserves in offshore California. Could this perhaps figure into why (and rightfully so) that California has the highest gasoline prices in the country, geez, I wonder.

It seems akin to Florida's shortage of natural gas during peak electrical generation periods while not allowing natural gas wells to be drilled off their coasts. Hmmmmm the old not in my backyard while I bitch about commodity price thing.

[oldjuggalo]

Welcome my friend..........Welcome to the Machine.

[JeanPaulSatire]

Sign behind Dana Perrino in WH press room: MISSION ACCOMPLISHED!

[CrushInfamy]

All these market fluctuations are manipulated. The oil industry is in business to make a profit, apparently at any cost.

Our government must be held accountable. If we do not prepare for potential disasters today, we deserve to suffer tomorrow. OUR GOVERNMENT MUST BE HELD ACCOUNTABLE.

There is only one solution. We must move our country away from oil, toward renewable fuels. If it takes ten years and serious sacrifice, let's begin that decade right now! We can't wait!

Those who refuse to prepare for stormy weather deserve to suffer the brunt of disasters and those who fail to hold their governments accountable deserve to endure every human hardship beneath the mighty wheels of selfishness, stupidity and greed.

[biwee]

Congresscritters complaining about the salaries of oil executives is a scam. The real problem is that the nation ignored President Carter's warning about oil 30 years ago. If real substantive action had been taken based on Carter's position those long years ago, we would not be in the mess we have now. Hind sight being perfect.......yet, in recent years we have seen the Repubbies refuse to improve CAFE standards. We have met the enemy, and we are that enemy. Gas prices are the subject of talk now with $135/bbl oil..........but, just wait until these high prices for fuel show up in the price of a can of beans at Walmart.

[thegreatgiginthesky]

None of the redneck idiots will complain until the price of beer shoots up.

[scotterb]

OPEC is producing at capacity now, only Saudi Arabia could increase production, and even that isn't enough to alter world price. There is speculation, and the price is probably higher because of that, but there is also increasing demand from Asia, and fears about future supplies. It isn't the oil companies fault, we can't solve this by simply drilling everywhere in Alaska and the US (there isn't enough oil there to really make a difference), and it isn't OPEC. It's simply that world production has reached its capacity and is unlikely to increase and demand keeps rising. Even if speculators are driving the price up, they know that there is reason to, it's not like the stock market bubble where we could see valuations were way out of whack. This could very well be the start of an energy crisis that will, in time, threaten the nature of western society and force dramatic changes. Yet politicians seek the easy way out -- blame OPEC, blame speculators, blame oil companies...nope, this is simply the nature of non-renewable resources. US production peaked in 1972, now world production is peaking. Get used to high prices.
http://scotterb.wordpress.com

[rwe2late]

Scotterb
Over the LONG-term, humanity's use of fossil fuel needs to change. And the US should have been leading the way, in earnest, for the past 20 years.
However, the recent spike in prices is due to:
Speculation,
enabled by secretive oligopoly control and
the neoCON Mideast invasions and wars.

[MilwaukeeDan]

scott, you hit it, the politicians only jobs are to get re-elected and react to crisis after they happen. There is no thinking outside the box in DC. I have been, for a long time asking, what happens to oil prices when the new Asian middle class starts driving cars. The west has driven hundreds of millions of Asians off the farms and into cities/factories to produce for us. Now they have purchasing power and are tired of riding their bikes(when I got my first job at 17, the first thing I wanted was a car), it's human nature. They are the new consumers, so demand rises, prices go up.

[TheCaulk]

I agree. This is about reelection, not the American people. For some reason people believe oil companies should be notn-profits. I'm sorry, but the CEOs of GLOBAL corporations are responsible to their shareholders not the US Senate. If profit margins of 8-10% are outrageous, congress should be fully booked for years trying to discipline CEOs of profitable corporations.

The job of congress is to make laws! Instead they continue to grandstand, as if scolding is their highest power. What a bunch of babies.

If we could liquify coal in this country we would have enough fuel for 200 years. Don't think that the oil is going to run out and we will have no choice but to be green. The green movement needs more real research and that is something the senate could actually fund, but alas they prefer to scold.

[ajax2]

scotterb, "OPEC is producing at capacity now,..."

OPEC members Nigeria, Iran, Iraq, and Saudi Arabia are not producing at capacity. scotterb is wrong.

[Hare]

Here we go again...

"Bubbles have certain common characteristics. One is that prices move extremely rapidly. Another is that prices rise on the flimsiest of evidence. A third is that any piece of evidence can be interpreted as a reason for piling into the market. All three apply in this case; as Nick Parsons, head of strategy at NAB Capital noted: "It's definitely a bubble when a firm knows it can come up with a high forecast, stick it in 24-point type and somebody will run it as a headline. I have never seen price action like this that has proved to be sustainable."

Those who think the oil price is destined to go ever higher might like to consider the recent 40% drop in wheat prices, which was the centre of its own speculative whirl a couple of months ago. They should also look at non-oil commodity prices, which are showing zero year-on-year growth: only to be expected given that the US is either in recession or on the brink of one, and that the rest of the developed world is slowing down too."

From todays Guardian

[freshnotbitter]

People can forego wheat and eat rice or something else. You can't put rice in your car.

[RoloTomassi]

I'm reposting this at the top of the coments, as everyone concerned about this completely unfounded runaway oil pricing should read this:

"There"s a few hedge fund managers out there who are masters at knowing how to exploit the peak [oil] theories and hot buttons of supply and demand and by making bold predictions of shocking price advancements to come, they only add more fuel to the bullish fire in a sort of self fulfilling prophecy." " National Gas Week, Sept. 5, 2005

Full story here:

http://www.star-telegram.com/ed_wallace/story/651928.html

Thanks to vippy for bringing this to light.

[rwe2late]

Over half of the recent rise in price is due to speculation, not supply shortage. (Of course, there is much less available supply due to the US invasion and occupation of Iraq, and the US economic war and sanctions against Iran.)
There is a theoretical possibility of a price fall if/when the oil bubble bursts. Mitigating AGAINST that possibility is the oil oligopoly's control of distribution and production. Another serious and ominous mitigating factor is the apparent growing likelihood of a Bush/Cheney attack on Iran.

HOW speculation is driving up prices
http://www.globalresearch.ca/index.php?context=va&aid=8878
http://www.globalresearch.ca/index.php?context=va&aid=9042

[EinChicago]

Exactly. It's no accident or coincidence that this started when teh Fed started making direct low interest loans to investment banks. Basically those banks are taking teh fed loans, plowing it into teh commodities market and skimming off teh profits. The worst offender is Sachs, who is not only borrowing Fed momny to buy oil, but it is in a mode of publishing weekly "analyst (i.,e, cheerleader) notes" which talk oil up further. It's the most blatent example of insider trading and price manipoulation. If this was under the SEA and not the CFMA, Sachs would be guilty of the most blatent types of 10(b)5 market frauds.

[Rule Of Law]

Ah, The Fed. I had forgotten about those slimy bastards hands in this. Of course cheap money is necessary to run up the prices. Good catch.