Gas Prices Climb Before Memorial Day Weekend

NEW YORK — Retail gasoline prices continued to climb Friday ahead of the Memorial Day weekend and the unofficial start of America's summer driving season.

The national average pump price increased nearly 3 cents overnight to $2.391 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Gasoline prices ticked higher every day this month.

Gas prices surged higher though a crude rally appears to have stalled.

Benchmark crude for July delivery rose 62 cents to settle at $61.67 a barrel in light, pre-holiday trading on the New York Mercantile Exchange. In London, Brent prices increased 85 cents to settle at $60.78 a barrel on the ICE Futures exchange.

Refiners have been turning less oil into gas with millions of people driving less in the recession. That is one of the reasons there is a divergence in price between oil and gas.

Gas is 32.9 cents a gallon more expensive than last month, but it's still $1.44 a gallon cheaper than a year ago when fears of an oil shortage sent energy prices soaring.

In the lower-48 states, gas prices ranged from an average of $2.20 a gallon in Arizona to $2.62 a gallon in California. Gas in Florida cost an average of $2.40 a gallon, while in Nevada it cost average $2.36 a gallon to fill up.

Michael Lynch, president of Strategic Energy & Economic Research, said the national average probably won't go much higher than $2.40 a gallon.

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"In the last five years or so," Lynch said, "there's a tendency for the price to peak out at or before the start of driving season."

Crude prices have held around $60, partly due to the falling value of the dollar. Crude is priced in dollars, so it becomes cheaper on international markets when the dollar falls.

The dollar fell Friday to a four-month low against the euro. By midday, it was trading at $1.3979. The dollar bought 94.67 yen, down from 99 yen two weeks ago.

Oil supplies have been in flux recently. OPEC countries have boosted exports by an estimated 200,000 barrels a day in the four weeks to June 6, according to tanker tracker Oil Movements.

Analyst Addison Armstrong also noted that Nigerian crude production dwindled to half the country's total capacity in April amid renewed fighting with militants who want to remove all oil workers from the region.

In other Nymex trading, gasoline for June delivery rose 4.11 cents to settle at $1.8408 a gallon and heating oil added less than a penny to settle at $1.538 a gallon. Natural gas for June delivery dropped 8.8 cents to settle at $3.515 per 1,000 cubic feet.

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Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.

Comments

[ohmetoo]

We still don't know the private guest list to the energy policy meeting Cheney hosted do we? Which investigative reporter is working on this, which newspaper, which news service?

[TxAggie]

WHo the hell cares. In case you haven't heard, Bush and CHeney have left office. Obama is the one we have to worry about now.

[local21]

and Illinois will have the highest gas prices in the country...­whats new?

[TxAggie]

No wonder, Illinois has the 3rd highest gasoline tax (64 cents a gallon) in the nation.

[imsosure]

this happens nearly every holiday, regardless of the price of crude

[redraspberry]

I get so tired of the standard reasons why gas is increasing in price. No matter what the situation the oil industry will not allow a holiday to go buy without some gouging. In the past they have moved a week or two ahead of the holiday but this one is running right on cue.

Summer blends, low inventories, unscheduled maintenance, storms in the gulf, high crude prices ..... They really just need to use the term planned price manipulation.

[SangZe]

It's a form of rape that happens every Spring.

[TxAggie]

Coveark- Giant Corporate Baboons? Does that include the over 5,000 US companies involved in searching for domestic oil and gas? Come to the oil patch and see what is involved in finding oil and gas. Learn about the effort put in by hundreds of thousands of people to bring you gasoline in spite of the geological, mechanical, financial, regulatory and political risks involved. You might consider the impact of government regulation, taxes and lack of access because of the lack of political spines in Washington. Come to the company I work for with our slightly more than 100 employees and point out the "Corporate Baboons". I guess its easier to demonize rather than really understand the issue. Do you consider those state and local taxes on gasoline (larger than the produers share) to be a part of the Baboon equation?

[cdrach]

the saudi oil minister said on 60 minutes it costa them 1 OR 2 BUCKS for them to produce a gallon of crude oil-after that it is pure frofit for them and tha small costs to ship it andf refine it in the huge amounts they do it in

[DuganS1]

The cost of production in the oil sands or in deep water is often over $60 per barrel. For the Saudis, their costs are far over $1-$2 a barrel as the cost of oil services and drilling equipment alone far exceed the $1-$2 range. Costs are coming down, however, because of reduced demand. It will just take more time.

[TxAggie]

Vippy- It would appear that you and I are in agreement, "vote the bastards out", but I suspect we may differ on who the bastards are. The fact that refineries are at 85% capacity is reflective of the age of our refineries, their location in the country and the demand for refined products. It makes no sense for a refiner to produce more than the market will purchase, the refinery would have to shut down when storage tanks are full and you do not simply shut down, fire up and shut down refineries. If gasoline was at 99 cents, in the state of California, taxes would take up 64 cents of that, do you really think we can find, produce, refine, transport and market gasoline on that 35 cent margin? Did you base that no. on anything? (sorry rhetorical question).

[TxAggie]

Different Drummer- you are not taking into consideration the effect of state and local taxes on the price of gasoline, these taxes are per gallon, not based on %. For example, Illinois' tax on gasoline is around 64 cents so at $2.50 that represents 25.6% of the pump price. The tax is fixed, so a reduction in the price of crude does not result in a corresponding drop in gasoline prices. The price of crude is set on the world market-it is not controlled by the oil companies, government run cartels, perhaps.

[TxAggie]

Bob- I think you are too traumatized to grasp the complexities of the O&G business. Exxon (nor any other oil company) does not control the price of crude, it is a worlwide commodity , Exxon is vertically integrated- they produce, refine and market. Being vertically integrated they tend to make more money on refining when commodity prices are low and less on refining when commodity prices are high. They do make money and it is billions of dollars becasue of the scale of their operations, however their ROI is not out of line for oil companies and less than many industries (such as drugs, movie making, banking, etc). They are the 13th largest oil company in the world, the 12 larger companies are all state owned companies. The financial wherewithall of Exxon allows them to search for O&G in capital intensive, hostile and technically challenging areas of the world that most companies can't.

[Cyberoptic]

The economy can't recover if they keep doing this...

[vippy]

Next election please remember this. Our congress is sitting by idly while speculators drive up the price of oil and gas again. Currently, the world is awash in oil, refinieries only operating at 85%
capacity but the prices are out of line. This is not supply and demand for gas would be 99 cents and the barrel of oil right now $ 10. The Dept of Energy just came out and stated that last year's natural gas prices were manipulated BUT WHAT IS OUR RECOURSE??? NOTHING at all. We take it and bend over for more. Vote the bastards out of office.

[DuganS1]

Prices are not out of line. THe cost of production is still very high, so companies often times are not making money selling oil, even at $60 a barrel. Many majors have been cutting back on drilling merely because of high costs, plus are trying to negotiate down day rates and equipment prices. There is a price adjustment process that's taking place. It took time for costs to come down in the early 80s too. Also remember that countries worldwide are printing money and running massive deficits, so the value of hard assets is going up relative to the heavily devalued paper money. Who wants dollars while they are flying off the printing press, when they can own oil which is precious and finite?

[Tommygun264]

Drive less than 50 miles in a given day on city streets with speed limits of 35 or less? Check it out:

http://www.gemcar.com/models/

[Tommygun264]

Gosh, that's tough. Now if you will excuse me, I'm going to unplug my NEV (Neighborhood Electric Vehicle) now that it's finished it's charge cycle. And before you jump on me - our electricity is generated by burning garbage and natural gas here in Hawaii. No coal, no oil.

[cjt1957]

That burning garbage must be extreamly clean...

[wm1066]

This is the cheney energy agenda that was set back in 2001, use any method to raise gas prices and hobble Congress from investigating the fraud by the oil companies!

[Cyberoptic]

Yep, Cheney and Halliburton which also built Gitmo.

[falco]

Many are missing the point. The point is the gas and oil companies make billions for their owners. And we, we have to stay home rather than bitch?!! And lest you think it's greed or capitalism, think again. It's control. Stay home? That's what they want the peasants to do!! It's control. It's feudalism. It's diabolical.