Gasoline prices are on the rise
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Those slowly swelling pump prices aren’t done yet, energy analysts said, as crude oil futures jumped back above $70 a barrel today to close near their trading high for the year.
Retail gasoline prices had been on a gradual descent since reaching their 2009 highs on June 22, averaging $3.005 in California and $2.691 nationally for a gallon of regular unleaded.
But they are on the rise again, jumping 6.7 cents to $2.896 a gallon in California over the last week, according to the Energy Department’s weekly survey of filling stations, released today.
The U.S. average price climbed 5.4 cents to $2.557 a gallon on a day when crude oil futures for September delivery closed up $2.13 to $71.58 a barrel on the New York Mercantile Exchange. Oil is closing in on the 2009 high of $72.68 reached on June 11.
Encouraging economic news in the form of rising Chinese and U.S. manufacturing statistics was the primary reason behind the increase, analysts said, as investors were anxious for any sign that an economic recovery might be finally underway. Weakness in the dollar also contributed; because oil is priced in dollars, a poor showing by U.S. currency makes oil cheaper for foreign buyers.
Analysts cautioned that the rise in oil and other energy commodities could damage U.S. and global economies when they can least afford it. One expert said the climb out of the worst global recession since World War II had already been slowed by the fact that oil prices have doubled since December.
“The increase in energy prices since December has already reduced the pace of the recovery,” said Paul Bingham, director of world trade and transportation markets for IHS Global Insight.
“Higher energy prices chew into the earnings of companies that have begun to make a little more money and seriously hurts those companies that are still in contraction,” Bingham said. “For households, it diverts consumer spending from everything else they might be buying.”
Update: And now a video that explains it all:
-- Ronald D. White
