Gas And Oil Prices Hit New Records

Falling Supplies Boost Energy Futures; National Average Of Gasoline Now $3.343 A Gallon

(AP)  Crude oil futures topped $112 per barrel, setting a new record after a weekly U.S. government inventory report on Wednesday showed an unexpected decline in inventories. Gasoline futures also climbed on a drawdown in stocks.

The U.S. Energy Information Administration's inventory report, closely watched by the market, showed crude stocks fell by 3.2 million barrels last week. Analysts surveyed by Dow Jones Newswires expected, on average, a 2.4-million-barrel-increase.

The inventory slide sent light, sweet crude for May delivery up $2.37 to settle at a record $110.87 a barrel on the New York Mercantile Exchange after earlier rising as high as $112.21. That beat a trading record of $111.80 set last month.

The EIA also said gasoline and distillate supplies - which include diesel fuel and heating oil - fell more than expected last week.

May gasoline futures rose 2.38 cents to settle at $2.7742 a gallon on the Nymex - a level that approaches the record futures price of $2.925 per gallon set in 2005 when Hurricane Katrina struck New Orleans.

The national average price of a gallon of regular unleaded gas rose 1.2 cents to a record $3.343 a gallon, according to a survey of gas stations by AAA and the Oil Price Information Service. With the peak of summer driving still to come and gas also following crude higher, the fuel may well reach the retail price of $4 a gallon that the Energy Department said was a possibility.

But gasoline prices that are 55 cents higher than a year ago are hurting demand for gasoline, which fell last week by nearly 2 percent from year-ago levels, the EIA said. It is not yet known if demand will continue to drop, and if so, if that will affect prices.

"People are cutting back on gasoline purchases because the economy is squeezing them right now," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

Analysts expect demand for gasoline and oil to fall further as prices rise. Theoretically, that should bring prices down. But so far this year, prices have shown little inclination to fall in response to eroding demand. With gasoline supplies shrinking and the summer approaching - when demand, while weaker than last year, will be stronger than it is now - consumers may have to wait until this fall for price relief.

Some analysts cautioned against reading too much into last week's drop in crude supplies, noting a sharp drop in imports over the same period.

Before the EIA issued its report, oil prices were already higher due to the dollar's slide against the euro Wednesday. Many investors see commodities such as oil as an effective hedge against a falling dollar and inflation. Also, a weaker greenback makes oil cheaper to investors overseas.

Analysts attribute much of oil's rise this year to speculative buying tied to the falling dollar. With the Federal Reserve expected to cut rates several more times this year, which will likely further weaken the dollar, oil prices may continue rising despite tepid demand.

May heating oil futures rose 12.43 cents to settle at $3.2345 a gallon after earlier rising to a trading record of $3.2561 a gallon.

[noloyalisti]

How''s that Republican conservative agenda treating you now? Let''s vote for the war-monger McBush and continue on.

[payasyougo]

The president should...

1.) stop the winter/summer gasoline formulas, which have no proven benefit. This would fix the refinery excuses for high prices.

Smog in the city is due to stop and go traffic resulting in numerous accelerations, each of which generates more emissions than several miles of constant speed. This is a traffic quantity/management problem that can''t be solved by magic fuel formulas.

2.) mandate 55mph maximum speed limit for about 6 months. This saves on average 15%. This would reduce consumption thus bulding up inventories and eliminate that excuse for high prices.

Watch the cost of fuel drop just on the enactment of these two mandates - that would reveal and take care of the futures speculators.

[johnens]

My comment / question is more to cbsnews.com and all the other "news" organizations out there...

What is the main concern of the American people?
(It''s the economy stupid.)
Why aren''t any of the news organizations making that their headline giving the severity of the problem?

The headlines today and until it is fixed should be -"Recession!".

The recession has started and it is confirmed by most of the top economists in the world. The R word is now being used to describe what the average American is feeling.

I get the feeling the media is trying to distract us with stupid stories that we just don''t care about. Anything but an article on the recession, what it means to the average American and what we are going to do about it.

[Gary Kempf]

The oil companies that own their own oil wells don''''t pay this much for crude, but they charge us for it based on these prices. I guess another quarter of windfall profits.


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Posted by fstop100 at 07:57 AM : Apr 10, 2008

They are also suppose to be paying royalties to uncle sam for U.S oil, I doubt that is happening too.

[fstop100]

The oil companies that own their own oil wells don''t pay this much for crude, but they charge us for it based on these prices. I guess another quarter of windfall profits.

[Gary Kempf]

So, if the state and federal governments decide to lay 5 to 7 dollar a gallon tax on gasoline to fund programs (which, by the way, are already being funded here), you''''d be OK with that?


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Posted by TheGateway1 at 05:53 AM : Apr 10, 2008
+ report

I didn''t say that, I said those prices reflect all the social programs that is supported by it.

[Gary Kempf]

Now what I really want to know is, If Bush and the "Republicans" are for lower taxes - Oh, say as a "Republican" platform issue - why haven''''t the Feds and the Red States worked hard to repeal Gasoline taxes.

I''''ll wait here with the crickets for the answer.....


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Posted by FloydZepp at 07:05 AM : Apr 10, 2008

I definitely bet you will be hearing nothing but crickets a long time before you get a answer from the the Republicans on that question.

[gunownerdan]

We Americans really seem to like being raped in the behind by billionaire oil men.

[termtex01]

The 18.4 cents per gallon federal tax has been pretty stable since 1993.

http://www.artba.org/economics_research/reports/gas_tax_history.htm

[termtex01]

"The Gateway1 Quite correct, your figures are accurate, however you fail to state that sales tax hovers bewteen 17.5% and 20% coupled with a draconian fuel tax. Government love it when traders s c r e w the price as thier percentage goes up. Is there any wonder we are in recession AND it has nothing at all to do with the sub-prime lending rates.

Posted by drinuk at 05:35 AM : Apr 10, 2008"

State and federal gas taxes per gallon are locked in. They do not increase or decrease with the fluctuating cost of each gallon. The federal government gets 18.4 cents per gallon whether it cost the consumer 2 dollars or 3 dollars a gallon. Same for the state gas taxes.

[termtex01]

"
There is a big difference in Europe, All those countries gas prices also support medical,retirement, mass transit,all forms of social programs.

Posted by navpro at 05:42 AM : Apr 10, 2008"

So, if the state and federal governments decide to lay 5 to 7 dollar a gallon tax on gasoline to fund programs (which, by the way, are already being funded here), you''d be OK with that?

[Gary Kempf]

Belgium $8.39
France $8.16
Germany $8.30
Italy $8.15
Netherlands $9.20
UK $8.04
US $3.51


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Posted by TheGateway1 at 05:21 AM : Apr 10, 2008

There is a big difference in Europe, All those countries gas prices also support medical,retirement, mass transit,all forms of social programs.

[shanev137]

You gotta love the Bush-loving ignoramuses who try and compare US gas prices to European gas prices to try and make themselves feel better.

[drinuk]

The Gateway1 Quite correct, your figures are accurate, however you fail to state that sales tax hovers bewteen 17.5% and 20% coupled with a draconian fuel tax. Government love it when traders s c r e w the price as thier percentage goes up. Is there any wonder we are in recession AND it has nothing at all to do with the sub-prime lending rates.

[drinuk]

The answer is in the hands of us the consummers, cut back, stop using so much of the stuff. I have not heard one word from either presidential candidate concerning public transport, which stinks in this country. rudy654 is correct, it is shameful that we don''t even come close to a intergrated rail system which Europe benefits from. It is hardly surprising that their currency is currently swamping the dollar.

Time for serious change and not just in the White House, it''s time the crooks and carpetbaggers were run out of town.

[termtex01]

"Has gas prices been going up? But we have the greatest Pres./VP combo in this nation''''s history and they also happen to be oilmen. I''''m...suprised.

Posted by ApprxAm at 02:12 AM : Apr 10, 2008"

Well, you could live in Europe:

http://www.eia.doe.gov/emeu/international/gas1.html

Weekly Retail Price per gallon (US dollars) as of 31 March 2008:

Belgium $8.39
France $8.16
Germany $8.30
Italy $8.15
Netherlands $9.20
UK $8.04
US $3.51

[termtex01]

"Can the EIA tell us what the gas prices will be this fall around election time??? Vegas could make bets on it.
Posted by mikekleber at 03:09 AM : Apr 10, 2008"

Historically (not just in election years) gasoline prices drop after the summer peak driving season, and rise a bit again as the country gets more into winter. So, there is normally a drop in prices around November whether there are elections or not.

http://www.doe.gov/pricestrends/index.htm

[termtex01]

Explain this: Gas is trading at $2.77 a gallon, but the national average we pay is $3.34. a difference of 57 cents a gallon. So, assuming the difference is because of state and federal taxes using those figures, we are paying what, about a 17% tax charge on gasoline?

Normal state sales taxes range from 0% in Alaska, Delaware, Montana, New Hampshire, and Oregon, to highs of 7% in Mississippi, New Jersey, Rhode Island, Tennessee, and 7.25% in California.

So, why is gasoline taxed at such a higher rate? What would you do if all purchases started to be taxed at that rate? You''d probably go ballistic.

The federal government charges 18.4 cents a gallon tax. That means, the states are taxing the balance of the 57 cents. And I can just bet not all of that goes to road improvement or items directly related to transport. A good chunk probably funds other programs or ''pet'' projects.


Just stuff to think about before you go ''ballistic'' on the ''federal'' government for gas prices. Look to your state leaders to answer the questions of why YOU have to pay so much.

[mikekleber]

Can the EIA tell us what the gas prices will be this fall around election time??? Vegas could make bets on it.

[marcosis78]

I concur