Gas Prices on Upswing
Seasonal influences are strong this time of year and account for much of the expected increase that many analysts say will push gasoline to a nationwide average of at least $3 per gallon this spring. Rising oil prices also are a factor in higher gasoline prices.
"There is no legitimate fundamental reason for higher prices, but it is March 1st, so we have to expect to see them," Peter Beutel of Cameron Hanover said Monday of oil prices in his report. "Reasons have a way of materializing at this time of year."
Wholesale prices for the April gasoline contract on the New York Mercantile Exchange are about 10 to 12 cents higher than the March contract that expired Friday. Much of the rise comes from refiners switching to more expensive summer blends of gasoline designed to meet tougher pollution standards in effect between April and September. The higher prices should make their way to the pump over the next few weeks.
At $3 per gallon, a typical motorist using 50 gallons of gasoline would pay about $150 per month for fuel. That is about $15 a month more than current prices. Drivers currently spend about 2.5 percent of their income on fuel.
The higher prices come at a time when most Americans' incomes are stagnant. Incomes edged up 0.1 percent in January, below analysts' estimates, according to the Commerce Department.
A family with one car is spending about 4 percent of its income on fuel currently, according to Oil Price Information Service.
Gasoline prices were flat overnight, rising 0.1 cents Monday to a national average of $2.705 per gallon, according to auto club AAA, Wright Express and OPIS.
Prices have moved higher the past two weeks, approaching the 2010 high of $2.7583 per gallon set on Jan. 14. In the past week prices climbed 5.7 cents and are now 78.4 cents higher than year ago levels.
The Energy Information Administration said Monday that the nationwide average of gasoline prices was $2.702 per gallon Monday, an increase of 4.7 cents in the past week. The Gulf of Mexico region posted the lowest average prices at $2.596 per gallon. The West Coast was highest at $2.937 per gallon.
Crude oil prices are more than twice what they were a year ago when the U.S. was mired in the Great Recession. Investors look for global demand to pick up as the economy improves, especially in China and other developing countries.
Oil prices got to $80.62 a barrel Monday on the NYMEX before falling back to settle at $78.70, down 96 cents. The $80 level has been tough for oil to crack. It has reached the mark time and again over the past several months only to fall back again.
A stronger dollar also was a drag on oil Monday. Oil is traded in dollars on global markets and becomes more expensive for international investors who hold other currencies.
In other Nymex trading in April contracts, heating oil fell 1.18 cents to settle at $2.0235 a gallon, and gasoline lost 3.23 cents to settle at $2.1556 a gallon. Natural gas lost 13.4 cents to settle at $4.679 per 1,000 cubic feet.
In London, Brent crude dropped 70 cents to settle at $76.89 on the ICE futures exchange.
Associated Press writers Pablo Gorondi in Budapest and Alex Kennedy in Singapore contributed to this report.