Gasoline Prices Slip -- for Now
Gasoline prices dribbled lower across most of the nation during the last week, the Energy Department said Tuesday, but fuel experts warned that costs at the pump probably would surge again in 2006 with an increase in consumption.
In New York futures trading Tuesday, oil, natural gas and heating oil prices fell on expectations of warmer temperatures just two weeks after a cold snap in the Northeastern U.S. helped send natural gas to record highs. Cold weather means more robust demand for natural gas and other fuels used to heat homes and businesses.
“This sell-off was really weather-related, and if the weather turns colder we could see prices shoot back,” said Phil Flynn, vice president and senior market analyst for Alaron Trading Corp. in Chicago.
Natural gas for January delivery fell to $11.022 per million British thermal units, down $1.261. February light sweet crude closed at $58.16 a barrel, down 27 cents. January heating oil futures settled at $1.637 a gallon, down 6.83 cents.
The recent decline in oil prices along with a seasonal slowing in gasoline demand caused the U.S. average pump price to fall after two weeks of increases, according to a survey by the Energy Information Administration, an arm of the Energy Department. The U.S. average for self-serve regular gasoline dropped 1.4 cents to $2.197 a gallon for the week ended Monday; the average, reported a day late because of the Christmas holiday, was still 40.6 cents higher than a year earlier.
California motorists paid an average $2.233 for a gallon of self-serve regular gasoline, down 1.6 cents for the week but up 22.3 cents from the same week last year. It was the 13th consecutive weekly decline in the state’s average gasoline price.
Diesel prices remained relatively high compared with gasoline because of a continuing strain on resources from worldwide manufacturing demand, analysts said.
In California, the average diesel price rose 2.2 cents to $2.543 a gallon during the last week, 44.6 cents above last year’s average price. Nationwide, diesel fell 1.4 cents to $2.448 a gallon, 46.1 cents more than the same period last year.
The respite from gasoline price increases is likely to end early in 2006, experts said.
“Gasoline prices down the road will be vulnerable to another spike because gasoline inventories are below what they should be for this time of year and there will be another squeeze as we enter the summer driving season,” Flynn said.
Tom Kloza, chief oil analyst for the Oil Price Information Service, predicted a quick return of the soaring prices that shocked motorists throughout much of 2005. “With a growing economy and growth in demand, we are going to be tugging at the limitations of supply as we typically do,” he said.
Kloza added that U.S. refinery maintenance, put off in many instances because of the disruptions caused by hurricanes Katrina and Rita in August and September, will add to prices as that work finally proceeds.
On Tuesday, the International Energy Agency said U.S. oil and fuel production had recovered enough so that it no longer needed to offer emergency stocks to make up for supplies lost because of hurricane damage. The Paris-based agency, an advisor to 26 oil-consuming nations, said world markets absorbed nearly all of the 60 million barrels of crude oil and refined products that it released in early September.
