Tuesday, March 23, 2010

Getting pinched at the Pump? Gasoline pump prices highest since October 2008

Does it seem like you and your customers spending more at the pump? Gasoline pump prices lingered at a 17-month high on Monday following a steady climb in recent weeks. Nationwide average retail prices remained flat at $2.82 per gallon, the highest level since October 2008. Prices are up 18.6 cents in the past month, according to AAA and OPIS, the Oil Price Information Service.

That matched the national average in the Energy Information Administration's weekly report, up 3 cents from a week ago and 86 cents above a year ago. California had the highest average pump price — $3.09 a gallon — and the Gulf Coast region was the lowest at $2.69 a gallon. Many experts and the EIA think average gasoline prices will hit $3 or more this spring or summer before easing later in the year. More expensive gasoline blends to cut pollution in the warmer months, and the fact that more drivers take to the road, adding to seasonal demand, should keep pump prices up.

When gas averages $3 per gallon, an average driver using 50 gallons of gasoline a month will spend $150 on fuel. A year ago, prices were at $2 a gallon. The price rise isn’t good news, as it comes as the economy continues its slow recovery from the current recession and deals with stubbornly high unemployment.

US Drivers Not Alone

Pump prices could potentially ease a couple of pennies later this week, since the month long rally in oil prices stalled at the end of last week. The price of crude oil is the major component of the cost of a gallon of gasoline. Crude oil prices gained little ground Monday. The April contract, which expires Monday, rose 57 cents to settle at $81.25 a barrel on the New York Mercantile Exchange. Most of the trading moved to the May contract, which added 63 cents to settle at $81.60. This means there will no large downward move in gasoline prices in the short-term. In London, Brent crude rose 66 cents to settle at $80.54 on the ICE futures exchange, so European drivers are experiencing the same price increases. In other Nymex trading in April contracts, heating oil rose 0.7 cent to settle at $2.0837 a gallon, and gasoline gained 0.06 cent to settle at $2.2562 a gallon.

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