Cheaper gas can’t last, analysts warn
Retail gasoline prices fell across much of the U.S. over the last week, the Energy Department said Monday, but analysts warned motorists to enjoy it while it lasted. Prices were expected to rise to as high as $2.25 a gallon nationally and to $2.50 in California and the West Coast by the Memorial Day weekend.
The average cost of a gallon of self-serve regular gasoline in California fell 3.4 cents to $2.162. That was $1.442 a gallon below the year-earlier price. Nationally, the average fell 3.1 cents to $1.910 a gallon, which was $1.347 less than the price at this time last year.
Crude prices rose despite some dour predictions about global oil demand. The bump-up was also a surprise after the Organization of the Petroleum Exporting Countries on Sunday declined to rein in production to prop up prices that remain $100 a barrel below the record high reached last July.
Crude oil futures for April delivery rose $1.10 to $47.35 a barrel on the New York Mercantile Exchange.
At least one expert thought the increase in oil prices and OPEC’s decision to forgo further production cuts may have had something to do with U.S. Energy Secretary Stephen Chu’s visit to the OPEC meeting in Vienna.
“Secretary Chu had to impress on the oil ministers the urgency of not lowering their oil shipments even more than their quotas,” said Bob van der Valk, fuel-pricing analyst with 4Refuel Inc., fuel consultants in Lynnwood, Wash.
“This had to be done in order to assist the U.S. and in turn the world economies in recovering from their current recession.”
Van der Valk also said gasoline prices were bound to rise despite weak demand.
The switch from cheaper, winter-grade fuel to a more complex summer blend added to costs of refining a gallon of fuel, he said.