Pump prices jumped a nickel nationwide over the last week, the Energy Department said Monday, as driver demand slightly outpaced 2005 levels and supplies slipped. But prices in California held steady for the second straight week.
A gallon of self-serve regular gasoline rose just 0.3 cent to $2.496 a gallon in California, while the U.S. average increased 5.1 cents to $2.297 a gallon, according to the Energy Department's weekly survey of filling stations around the nation. The California average was up 16.1 cents from the year-earlier price, and the U.S. average was up 15 cents; both averages were down more than 70 cents from their midsummer highs.
The biggest price hikes occurred east of the Rocky Mountains, up 7 cents in the lower Atlantic states and 6.6 cents along the East Coast.
Glen Falk, retail pricing manager for the Oil Price Information Service in New Jersey, blamed the increases on slightly stronger demand during the holiday preparation season and a decline in the nation's supply of fuel. Falk said that refinery maintenance also was eating into supplies.
In addition, oil prices have been on the rise, surging 7% last week on cold weather and talk of additional production cuts by the Organization of the Petroleum Exporting Countries.
In New York futures trading Monday, light sweet crude for January delivery fell 99 cents to $62.44 a barrel. Phil Flynn, senior market analyst for Alaron Trading Corp., attributed the decline to profit taking and a mild weather forecast. If the weather turns cold again, prices could jump to $70 a barrel, he said.
Lehman Bros. energy analysts Edward Morse and Adam Robinson see even higher prices on the horizon. The two analysts told clients Monday that oil prices appeared to have bottomed out and probably would average more than $70 a barrel in 2007, based on rising global demand and the inability of non-OPEC sources to add much to world production.
"Next year's market is unlikely in our view to avoid spikes in response to underlying risks stemming from Iran, Nigeria, hurricanes, terrorism and other factors. Thus, we believe that crude oil prices will average more than $70 per barrel in 2007, with overall price risks skewed even further to the upside," the Lehman Bros. report said.