Gasoline prices rise in U.S. and California as oil climbs

Oil and gasoline prices began the new year on the same rising course that closed out 2010.

Crude oil for February delivery jumped to $92.66 a barrel, a 26-month high, before settling at $91.55, up 17 cents, on the New York Mercantile Exchange. Oil last settled above $92 a barrel Oct. 3, 2008, when it closed at $93.88.

Higher crude oil costs have been pushing up pump prices since early December. On Monday, the average U.S. pump price climbed 1.8 cents to $3.07 a gallon, according to the Energy Department’s weekly survey of service stations around the U.S. California’s average gained 2.1 cents to $3.308 a gallon.


Analysts differed widely on how high oil might rise in 2011.

Sanford C. Bernstein & Co. said the commodity would reach a new equilibrium at $90 a barrel this year after spending much of 2010 in a range of $75 to $85 a barrel. Analysts for Natixis Bleichroeder said the average this year would be even higher, about $100 a barrel. Oil last closed above $100 a barrel Sept. 30, 2008, at $100.64.

Tom Kloza, chief oil analyst for Oil Price Information Service, warned that oil speculation and other factors would make this an expensive year at the pump.

“We are looking at the second fuel price apocalypse of the 21st century,” Kloza said. “Money flow is the performance-enhancing drug for prices. A spring peak in the neighborhood of $100 a barrel or higher is likely” for crude oil.

James DiGeorgia, publisher and editor of the Gold and Energy Advisor, predicted oil would reach $101 to $102 a barrel, but he saw it happening as early as next week. For the rest of the year, DiGeorgia said, he expected oil to bounce between $85 and $100 a barrel.

“Oil has big momentum,” DiGeorgia said. “What’s driving it is a little bit of speculation, cold weather around the world and economic recovery. We don’t think this is a move that will take us back to where we were in 2008. We don’t see oil going higher unless there is some other outside event.”

Phil Flynn, energy analyst for PFGBest Research, didn’t think oil would rise much higher than current levels, and he didn’t think the increase would survive for long.

“We could go to $95 to $97 a barrel in the next few weeks,” Flynn said. “We’re going to start off strong and then I think that prices will pull back. If it goes much higher, then that will slow demand and that will help keep prices in check.”