A steady climb for gas prices
While gas prices are rising fast enough to revive painful memories of the $4-a-gallon summer of 2008, the economic slack created by the recession all but guarantees prices won't spike the way they did last year, analysts say.
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Gasoline prices dipped slightly as the Thanksgiving travel season began, but are still significantly higher than they were a year ago, and are expected to remain so into the new year.
The average price of a gallon of regular unleaded gasoline at local pumps was $2.697 yesterday, two-tenths of a penny less than last week's average and down from $2.746 a month ago, according to the AAA Fuel Gauge report. But prices per gallon are about 60 cents per gallon more than they were at this time last year locally.
Nationally, the average price for regular unleaded was $2.636, more than 75 cents higher than the year-ago price of $1.885.
"It should be status quo for the near future," said AAA spokesman Brian Newbacher.
Gasoline prices set record highs last year, reaching a national average of $4.11 per gallon during the summer. Then they plummeted, and by the beginning of this year, drivers were filling up for less than $2 per gallon.
Since then, gasoline has marched upward with only minor pullbacks. GasBuddy.com, an online service that tracks gasoline prices, said that prices will end the year a dollar above year-ago prices.
The U.S. Energy Information Administration is projecting that higher crude oil prices will contribute to an increase in the annual average gasoline retail price from $2.36 per gallon in 2009 to $2.81 in 2010, with prices near $3 per gallon during next year's summer driving season.
The price of gasoline tracks closely the price of the crude oil, which has risen steadily since the beginning of the year, closing at $77.96 a barrel yesterday.
The increases seem to be driven not so much by supply and demand as by the continued weakness of the dollar -- as the dollar weakens against other currencies, it takes more dollars to buy each barrel of oil.
Meanwhile, supplies are so abundant that refiners are shutting down facilities. In the past two months, Sunoco announced that it would idle its Eagle Point facility in New Jersey; El Paso, Texas-based Western Refining said it would shut down a refinery in Bloomfield, N.M.; and Valero Energy said it would close its Delaware City, Del., refinery.
"There's so much supply for refiners to use," Mr. Newbacher said. "There are literally hundreds of millions of barrels floating in the oceans on tankers."
Refiners say they are squeezed because what they can charge for gasoline and jet fuel is limited because demand is down because people aren't traveling as much but that the cost of crude oil has increased because of the weak dollar.
A survey by the AAA found that the number of Americans traveling away from home for Thanksgiving will be up just 2.1 percent this year from 2008.
First Published November 26, 2009 12:00 am