Last month turned out to be the most expensive January ever at U.S. gasoline pumps, boosted by growing economic strength.
January is typically a month of falling gasoline prices because fuel demand falters in the slower travel weeks that follow the year-end holidays.
Not so this year.
In January, retail gasoline prices averaged $3.37 a gallon, according to the Oil Price Information Service, a private fuel information service. That compared with the previous record average for the month of $3.095 a gallon, set last year. In 2010, January gasoline prices averaged just $2.71 a gallon.
The new record meant more pain in Americans’ budgets. A typical household, burning about 50 gallons of gasoline a month, paid about $168.50 for that fuel in January, or $33 more than in January 2010.
An economic pickup is behind some of the price appreciation, analysts said.
Increased demand for oil has helped increase crude prices, leaving the U.S. benchmark grade hovering around $100 a barrel in January, up $10 to $15 from year-earlier prices. At the same time, worldwide thirst for diesel, the fuel of industry, has caused U.S. refiners to export large amounts of diesel and therefore to produce less gasoline for U.S. motorists.
Then there’s the speculation factor. Traders have poured investment money into commodities markets on the bet that gasoline prices will keep rising, said Tom Kloza, chief oil analyst for the Oil Price Information Service.
“Among large hedge funds and commodity pools, there is nearly $10 billion more money than last year bet on a higher price outcome for gasoline futures than on a lower price outcome,” Kloza said.
In February, pump prices have continued to rise and remain at record levels for this time of the year.
In California, the average cost of a gallon of regular gasoline was $3.758, up 1.7 cents during the past week, according to the Energy Department’s weekly survey of service stations, released Monday. That was 36.1 cents higher than the old record for Feb. 6, set last year.
The U.S. average was $3.482, up 4.3 cents in the last week and 35 cents higher than the old record, set last year.
The price spurt may not be over, said Patrick DeHaan, senior petroleum analyst for GasBuddy.com, a fuel price tracking website.
“Gasoline prices tend to start moving significantly higher toward the end of February and into mid-March, so motorists should be preparing for higher prices,” DeHaan said.
There is some potential good news for drivers.
The Energy Department’s most recent petroleum report said that oil production outside the Organization of the Petroleum Exporting Countries is expected to grow at a faster rate than world demand for oil in 2012 and 2013.
The so-called non-OPEC countries, including the U.S., Russia and Brazil, accounted for about 59% of the world’s oil production in 2011. Much of that growth will come from the Americas, with an anticipated increase in the U.S. of more than 300,000 barrels a day of new oil production, second behind Brazil, with Canada running a close third.
In New York futures trading, benchmark crude fell 93 cents Monday to $96.91 a barrel. In London, the European benchmark crude rose $1.35 to $115.93.