Posted on 04/04/2008 11:27:18 AM PDT by bjs1779
NEW YORK (AP) -- Retail gas prices surged to a new record above $3.30 a gallon Friday and appear poised to rise further in coming weeks as gasoline supplies tighten.
Oil prices, meanwhile, supported the gas price rally by jumping more than $1 a barrel after a dismal employment report sent the dollar lower.
At the pump, gas prices rose 1.4 cents overnight to a national average of $3.303 a gallon, according to AAA and the Oil Price Information Service. That's the latest in a series of records, and about 60 cents higher than a year ago.
While oil's surge above $100 over the last month has boosted gas prices so far this year, analysts now expect gas prices to continue rising regardless of what direction crude takes. The Energy Department expects prices to peak near $3.50 a gallon later in the spring, but many analysts predict the spike could approach $4.
That's because gasoline supplies are falling, in part because producers are cutting back on production of the fuel due to the high cost of crude -- the more expensive crude is, the more refiners have to pay and the lower their profits are. They're also in the process of switching over from producing winter grades of gasoline to the less polluting but more expensive grade of fuel they're required to sell in the summer.
"That cuts back on some of the supply and helps to pump up the price," said Mike Pina, a spokesman for AAA.
The margin between the price refiners pay for crude and receive for selling the products they make from it is around $11 to $12 a barrel right now, according to the Oil Price Information Service. However, that margin has slipped into negative territory on some days in recent weeks and is well below margins of $37 a barrel refiners earned last spring.
On Thursday, ConocoPhillips said high crude prices were significantly hurting its refining margins. Last week, Valero Energy Corp. cut output at its Corpus Christi, Texas, refinery due to high supplies and falling demand. Analysts believe many other refiners are adopting similar tactics.
Friday's price spike is a sign those cutbacks may be working, giving everyone in the supply chain, from refiners to retailers, the ability to raise prices to try to boost margins. Many gas retailers say they make more on the sale of coffee and sundries in their convenience stores than from selling gasoline.
Of course, that's not good news for consumers also paying higher food prices and watching their home values slide. Food prices are high due in part to diesel prices, which held steady overnight at a national average of $4.023 a gallon, near recent records.
High oil prices are also hurting airlines. Aloha Airlines shut down and ATA Airlines filed for bankruptcy protection in recent weeks, citing high fuel prices as a cause of their failures.
In futures trading, meanwhile, oil futures rose Friday after the Labor Department said employers cut payrolls by 80,000 jobs last month, much more than analysts had expected. The unemployment rate rose to 5.1 percent. That news sent the dollar lower and pushed light, sweet crude for May delivery up $1.65 to $105.48 a barrel on the New York Mercantile Exchange. Gasoline futures for May delivery rose 0.61 cent to $2.7304 a gallon.
Much of crude's price moves in recent months have been tied to the dollar. Many investors view crude, gold and other hard commodities as hedges against a falling dollar and rising prices. Also, crude becomes less expensive for overseas investors when the dollar is falling.
In other Nymex trading Friday, May natural gas futures rose 5.8 cents to $9.475 per 1,000 cubic feet, while May heating oil futures rose 6.42 cents to $2.987 a gallon.
In London, May Brent crude futures rose $1.42 to $103.94 a barrel on the ICE Futures exchange.
No, what we need is a ban on Hedge Funds being allowed to buy oil or commodities futures. Do that,and you get rid of the $60+ bbl greed tax that’s going on.
Oil futures traders are having a ball, and the oil companies are laughing all the way to the bank.
From this link....
Ahead of the Bell: Oil inventory report
Gasoline inventories, meanwhile, fell by 3.3 million barrels, or 1.4 percent, to 229.2 million barrels, which were 11.2 percent above year-ago levels. Analysts expect stockpiles of the motor fuel fell by another 2 million barrels last week.
This is the heart of their little game they're playing. One day you hear of surpluses and the next day you hear supplies are low again. This gets all the speculators hyped up to drive up the costs more.
One day their golden goose will be dead and they'll wonder what happened.
its a conspiracy being perpetuated by oil companies.
bump
You got that right. I could of sworn i read an article here a few days ago that stated that we have plenty of Supply.
Forget the idiocy of having people not buy gas on a given day. Instead, have people commit to using their vacation time to curtail gas usage during a given month such as June.
Imagine a week where 15 percent of the country is not driving to work. And is not going on a long vacation drive. If you want to do something such as go to a nice hotel, do it local.
Now, repeat that over the course of a month, and maybe we can get the hedge funds to start playing musical chairs with each other by panicking and starting to sell their oil futures positions, or at least not roll them over.
Gas prices plummeted once when the hedge bubble popped a couple of years ago (taking Amaranth with them). The only way that can happen again is if there are concerted, organized efforts to fight back with short-term demand reductions.
At the risk of being flamed, IMO I see ZERO interest from the current administration in doing anything to help either. You would think that GWB would be talking about this daily as it is hurting our economy in a big way. If nothing else, he could sure help the party by putting the dems on the defensive by continually pointing out their resistance to domestic drilling. In avoiding the subject, it sure give the impression that he has no interest.
Furthermore, we are still filling the damn SPR when suspending it (at least temporarily) would assist in letting some air out of the speculative bubble.
You are right. If the elites in Congress and the rest of government wanted lower gas prices, gas prices would be lower.
It’s a business decision where the refineries have to decide exactly when to switch to a different formulation.
Having to store an excess of the unsalable product is not good.
Not having enough supply of the new formulation to supply demand is not good.
This is what market speculators make their living off of.
They gamble on the refineries skill. And we are the ‘house’ who must pay the gamblers their due.
“I could of sworn i read an article here a few days ago that stated that we have plenty of Supply.”
Yeah. But your thinking OIL.
They are thinking MONEY.
No need forr such drastic action. Just double or treble the exchanged-required margin for non-commercial traders in crude in products (i.e. so-called hedge funds, which can be done by executive order — no need for the Regress), and you’ll chase 60-70% of the long-side specs out of the mkt right away.
“If the elites in Congress and the rest of government wanted lower gas prices, gas prices would be lower.”
Why should they?
The higher the price of gas, the more gas tax they get to ‘spend’.
They drive government vehicles, or ride in them. They don’t have to pay for their own ‘fuel’.
That already is at the gas pump near me.
Last week, Valero Energy Corp. cut output at its Corpus Christi, Texas, refinery due to high supplies and falling demand. Analysts believe many other refiners are adopting similar tactics.
So, ah, the refiners are getting squeezed and now they're going to artificially tighten supplies to further raise prices. Do I have this about right? Isn't it about time for another explosion or mishap at a refinary about now?
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