Posted on 04/03/2005 6:16:32 PM PDT by BulletBobCo
NEW YORK (Reuters) - Regular gasoline pump prices in the United States may average as high as $2.50 by Memorial Day, shattering the records as futures prices climb to new peaks, analysts said on Friday.
U.S. retail gasoline is already running above $2.15 a gallon, well beyond last spring's peak of $2.05, according to government and industry surveys.
"Surging NYMEX futures are certainly an upward pressure on prices at the pump, so I would certainly expect to see retail prices move up sharply over the next few weeks," said Tim Evans, analyst with IFR Energy Services.
Gasoline futures on the New York Mercantile Exchange (NYMEX) hit a record Friday over $1.70 a gallon, keeping stride with a spike in the cost of crude as soaring global energy demand threatens to outpace supply.
While it is difficult to predict pump prices based on futures traded on the NYMEX, the increase will probably get passed on to motorists, with prices running up to $2.50 a gallon in the next month, said Ed Silliere, analyst with Energy Merchant Intermarket Futures.
The U.S. Energy Information Administration uses spot -- physical -- prices to predict retail prices, and the NYMEX is the benchmark off which spot prices are calculated, said Mike Burdette, analyst with the EIA.
U.S. average retail prices generally are 60 cents to 65 cents higher than spot prices, which on Friday were running about $1.70 a gallon in the U.S. Gulf Coast.
Friday's spot prices, Burdette said, would predict average retail gasoline prices of $2.30 to $2.35 per gallon, but only if the spot price stays put for at least several days.
CALIFORNIA TAKES THE BRUNT
Pump prices in California on Friday were 30 cents higher than the national average, according to the AAA's survey, and further spikes could send prices close to $3.
California tends to have higher prices than other states because of more stringent environmental rules governing fuel that out-of-state refiners have trouble meeting.
While soaring prices have yet to show an impact on fuel demand in the United States, that could be coming soon, IFR's Evans said. He pointed to the third quarter of 2004, when high gasoline prices helped lower year-on-year demand growth to 0.4 percent, less than the rate of population growth.
Current gasoline demand is running about 2 percent higher than last year, according to government figures.
EARLY SPIKE?
Evans said that if 2005 plays out like last year, the record high prices could hit before peak summer driving demand kicks in, and ease by July.
"Overall, I think that means we could see retail gasoline prices rise to the $2.30-2.40 level on a nationwide average, but that they would fall back to less than $2.00 by the 4th of July," Evans said.
The NYMEX front-month, for deliveries to the New York Harbor in May, settled on Friday at $1.7310 a gallon, and hit a record high of $1.7360 a gallon, with June delivery futures striking a record $1.75.
I'll tell you, I can't wait to see a viable alternative fuel burst the oil bubble. And I'm going to watch the oil companies and OPEC countries scramble frantically to prop up demand and dig themselves deeper in the hole. And I'm going to laugh, laugh, laugh.
"Can someone explain why gas prices are so high? Assume complete ignorance of even basic economic theory."
Not too long ago China started buying up every drop it could find to build up stockpiles, increasing demand.
OPEC has waited too long to ramp up output, strangling supply.
Environmental regulations in the US have kept new refineries from being built and have put extreme constraints on what current refineries can put out, further strangling supply.
Poor dollar performance overseas makes our money worth less, meaning international commodities such as oil cost more.
Translation: Bush's fault.
without public support, he isn't going to be able to advance any agenda - in other words, high gas prices are going to thwart any attempt at social security private accounts.
this is not a price control - just the opposite, the prices are being "controlled" now by the hedge funds to the tune of $10-15 per bbl. I am advocating that price control be broken.
that is correct, $105/bbl is the "target price" for the financial houses who are trading up oil prices.
the problem with this is that no one forced anyone to buy Cisco at $80 a share. It went to $80, I could care less. Its different with energy, there is a captive market of consumers behind it with fairly inelastic demand for the product. The hedge funds are forcing all of us to play.
and who exactly is going to develop that alternative energy source? it won't come from the private sector.
Screw inflation. It's too damned high.
A-freakin-men. Time for Congress and the Executive to get off their butts and get rid of all this boutique gas crap ... ONE BLEND, no summer/winter crap, no state by state crap ... just ONE FREAKIN BLEND.
Exactly, and that's why this is THE issue to watch, no matter where you stand. Social Security, judicial appointments, even the prolife agenda--none of that gets done if the President is hamstrung by an energy shock that translates into a faltering economy. THIS is what we need to be worrying about right now, folks.
no it won't. because industries who might conduct large scale investment in alternative energy sources know that the oil market is manipulated. as soon as alternatives are found at a $40/bbl equivalent price point, you'll see oil at $35/bbl which will wipe out their business plans.
we tend to hate government here on FR, and it is ineffective in many areas. But only a government style "Manhattan Project" in the area of alternative energy could yield widescale results. Sure, we will see some new technologies coming in on the margins - hybrid cars, a few windmills here or there, natural gas buses, maybe some hyrdrogen vehicles - but nothing widescale to displace the oil infrastructure.
there are only a small number of people here on FR who "get it" on this issue. Gas prices are the #1 factor influencing the president's approval rating right now, and as things get worse (and they are), his political capital for other issues becomes non-existent.
Appears moves above the range result in recessions. Makes sense to me. Peoples spendable income adjust slowly while spikes must be dealt with by reducing spending in other areas, hence the recessions.
"I am advocating that price control be broken."
I think housing prices are out of control......should we burst that cartel as well????? While we're at it, I find coffee a little steep.....let's get our government involved there too. Have you priced a new Chevy Silverado......they're out of line, way too expensive. I hope we can get a special investigation into price gouging.
.....where does it end.....
I had to pay $2.62/gal today in Acton, California....!
"I had to pay $2.62/gal today in Acton, California....!"
Thanks for sharing and proving my point.....which is that consumers are still paying the piper regardless of price.
the 1986 tax act passed by Reagan changed the tax code to remove speculation inflating real estate prices. It worked, housing prices fell after that law was past. was that a good or bad thing to do?
its not a price control, its the bursting of a speculative bubble that is inflating oil prices right now, and hurting consumers. if gasoline goes to $3+ per gallon, the President's approval rating will fall into the high 30s - and any agenda he hoped to advance in a 2nd term, will be over.
I know you can't control it, but I'd like to see about sixty years of that chart.
you are right about the recession for sure - less then 2 years actually if this continues.
Why is that? we all know prices go up...what are they scared of? I don't understand why 'not knowing the price of oil' drives the market down.
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