Pump Prices Creep Up As Oil Records Fall

Crude Settles Above $127 For The First Time, Forecasting A Summer Of Expensive Road Trips

(AP)  More gas and oil records fell Monday as retail fuel prices struck new highs and crude settled above $127 for the first time, tightening the squeeze on drivers planning holiday road trips next weekend.

Light, sweet crude for June delivery jumped 76 cents to settle at a record $127.05 a barrel on the New York Mercantile Exchange. Prices rallied at one point to within a nickel of Friday's record trading high near $128 a barrel.

Meanwhile, Americans are now paying an average of $3.79 for a gallon of regular gas, according to a survey by AAA and the Oil Price Information Service. Diesel, used to transport a wide range of goods, now costs $4.52 a gallon. Those prices, both records, are likely to keep rising, following crude's upward track.

"We're looking at $4 a gallon (for regular nationwide) once we get past Memorial Day and into June, given the oil prices we're seeing today," said Geoff Sundstrom, fuel price analyst at AAA.

In Pittsburgh, some drivers said they had been forced to adjust their spending habits because of higher prices at the pump, which are up about 17 percent from a peak at this time last year.

Rose Bonesso, a nonprofit worker, said the rising cost of gas has "hugely" affected her spending, and that she was trying to make fewer car trips from her suburban home.

"I definitely think a lot more before I either go to Starbucks or do anything like that because I know, all right, I've got at least $40 to $45 I've got to put in my tank this week," she said while buying gas on Pittsburgh's South Side.

Drivers in some parts of the country are already paying considerably more than the average. Prices in parts of California have been stuck above $4 a gallon for weeks now, although the statewide average is down to $3.96. Prices in Alaska and Connecticut are averaging just above $4 a gallon.

Those soaring prices - which compare with a national average of about $3.23 a year ago - are putting a strain on family finances and prompting some motorists to look for alternatives.

Jeanne Prows of West Chester, Ohio, said she and her husband are considering riding to work together to save on gas.

"We really don't have the extra cash this summer," she said.

In New Haven, Conn., drivers paid $4.05 for regular unleaded gas Monday.

Stacey Holmes, a teacher who lives and works in New Haven, said the high prices recently led her to buy a $20 used bicycle online so she can bike the three miles to work to save money.

"It just makes you a lot more aware of your budget," Holmes said. "I don't eat out much at all any more."

Sally Richmond, a paralegal from New Haven, said she's "a little angry, confused" at the gas prices. She said she now drives slower, which has helped.

"We can't cut back any more than we have," Richmond said.

A report released Sunday showed retail prices topped an average $4 a gallon for the first time in two metropolitan areas: Chicago and New York's Long Island. The Lundberg Survey of 7,000 stations nationwide found the cheapest city to be Tucson, Ariz., where a gallon of regular sold for $3.48 on average.

Oil prices shot higher Monday on a report that the Organization of Petroleum Exporting Countries would not increase production before its next meeting Sept. 9. Algerian Energy Minister Chakib Khelil, the current OPEC president, was quoted in government newspaper El Moudjahid as saying that "current prices aren't linked to the law of supply and demand."

The announcement came days after Saudi Arabia's oil minister said the world's largest oil producer had raised production by 300,000 barrels a day earlier this month.

That increase, while largely ignored by the market, should help grease a tight global market, said John Felmy, chief economist for the American Petroleum Institute, the industry's leading U.S. trade group.

"Certainly seeing increased production is helpful in terms of increased supplies," Felmy said.

Meanwhile, Holly Corp. said a key unit at its New Mexico refinery was shut down for repairs, cutting estimated May gasoline production by as much as 756,000 gallons per day. The outage is unlikely to significantly affect fuel prices, said Jim Ritterbusch, president of oil trading advisory firm Ritterbusch & Associates.

Trading is likely to be volatile on Tuesday as the June contract for crude expires on the Nymex. Traders typically adjust their holdings as a contract is about to expire, and that often leads to big price swings.

In other Nymex trading, heating oil futures fell 2.77 cents to settle at $3.6751 a gallon. Gasoline futures rose 1.31 cents to settle at $3.2366 a gallon. Natural gas futures sank 14 cents to settle at $10.927 per 1,000 cubic feet.

July Brent crude rose 7 cents to settle at $125.06 a barrel on the ICE Futures exchange in London.

[keithle1]

Seems like it goes up every other day. Literally. When''s it going to stop? How can the truckers afford it?

[lorinkundert]

Conventional wisdom would indicate that gas prices going up in tandem with rising oil prices would keep oil company revenues static, but that is not the case as they are reporting record profits which indicates that the rising prices are more about gouging than making up for higher costs.

[cattlekate]

Posted by stn_sage at 02:58 AM : May 21, 2008

I think your post is right on. There is a rising level of desperation that goes far beyond giving up Starbucks.

Of course, our MSM will be the last to report it.

I do fear riots this summer.

[nonayabiness]

"I definitely think a lot more before I either go to Starbucks or do anything like that because I know, all right, I''ve got at least $40 to $45 I''ve got to put in my tank this week," she said while buying gas on Pittsburgh''s South Side."

-Aww, gotta give up the Starbucks? Waaa. If you are gullable enough to pay $4 for a cup of coffee, then you can certainly afford $4 for fuel.

[stn_sage]

I find it interesting that an article I saw yesterday stated oil company execs expect gas prices will come down more than a dollar a gallon in a few months!

If prices are based on supply & demand, how could they possibly know this?! They can''t! However---

If they know the American consumer will be ''tapped out'' by then, if the incoming president will have the energy bill rewritten, if tax abatements are ceased, if windfall profits will be taxed, and/or a price ceiling imposed to prevent rioting and violence against those perceived to be responsible, THEN their comments make more sense!

If the public were to begin to get rid of oil execs, would the new incoming ones do what''s morally, ethically, and economically right---and lower prices NOW---versus waiting until the public''s broke?!

What do you think?

[michellem99-2009]

The price of a barrel is surely bush blame. He knows what he is doing. That bloody war he started is over oil. The govt and military use the most fuel. What can we do. I am doing it. Mass transit and walk. Clothe bags not plastic bags. Wash full loads and the same in dryer. Mircowave.

[nmsuip]

patriotic9 & dchu76:

YES! I speak free-market blasphemy! I said PRICE CONTROLS. Note that the U.S. is uncontestably the world''s largest market for oil, consuming 20+ million barrels per day (12 million net imports). China is a distant #2 consuming a mere 7 million barrels a day total followed by Japan at #3 (5 million barrels per day total). By the way, India is way down at #6 (2 million barrels per day total).

We can either be:
1. Victims of our position (like an addict pays whatever price his pusher demands for a "fix")
2. We can exploit our position (like a professional sports franchise demands taxpayers to fund a stadium where they will come to spend additional money on overpriced tickets, merchandise, hot dogs, & beer)

I choose #2. We set our price and oil producers who export to the U.S. can take it or leave it. If they think they can create enough additional demand equal to 2x the total consumption of China and Japan combined to make up for the loss of access to the U.S. market then good luck to them.

[element51]

jowand....There is a large deposit of oil in your back yard right under the bar-b-que pit. But you get nothing for the oil. Will you let them destroy your back yard to remove the oil? See, that''s the problem. You right wingers are all for drilling but not in your back yards. Truth is the lefties feel the same way. So don''t think that blocking oil exploration is being held up by only one party. However, I agree with you that there are vast amounts of oil available. What we must do is find ways to access it without raping the land. Once we do that I see no reason to hold back. This is critical to our survival and needs to be expedited.

[huanaco]

AMERICANS OIL COMPANIES ARE CUTTING OUR OWN THROAT, GOOD FELLOWS WHO DON,T CARE ABOUT THE COMMON PEOPLE . BUSH HAS DONE A GREAT JOB ENRICHING THE SAUDIS.

[jowand]

With oil deposits plus shale oil deposits we have enough oil for 400 years in the USA. Democrats are holding up the production of both of them.