Retail gasoline prices jumped higher over the last week in California and most of the nation, adding to what was already a record start for a new year.
The average price of a gallon of regular gasoline in California rose 7.2 cents to $3.707, shattering the old record for this time of year: $3.332 a gallon, set last year, according to the Energy Department’s weekly survey of filling stations.
The U.S. average rose 8.3 cents to $3.382. That easily surpassed the old record for this time of year: $3.089 a gallon, also set last year.
Analysts cited two reasons for the rising prices: exports draining U.S. fuel supplies and an increase in global tensions.
The Energy Department said in a report Monday that “weekly U.S. gross distillate export estimates (bound primarily for European and South American markets), were at record levels in the fourth quarter of 2011, topping more than 900,000 barrels a day in October and November and exceeding 1 million barrels a day in December.”
Hedge fund speculators are also pouring money into the oil markets, according to data compiled by the Commodity Futures Trading Commission. Part of the speculation was based on indications of stronger U.S. economic growth. And part was based on Iran’s continuing threats to try to close the Strait of Hormuz, a strategically important choke point near the entrance to the Persian Gulf.
On average, tankers traverse the strait carrying 15 million to 19 million barrels of crude a day, which is equal to nearly one-fifth of the world’s daily consumption of oil.
“Gas prices are rising across much of the nation as Iran has continued to threaten closing the Strait of Hormuz, a vital waterway for global oil shipments,” said Patrick DeHaan, senior petroleum analyst for GasBuddy.com, a website that tracks fuel prices.
The ascent of oil prices paused Monday, falling 25 cents to $101.31 a barrel on the New York Mercantile Exchange. Oil has risen sharply in the last few weeks after falling to less than $76 a barrel. In London, Brent North Sea oil was down 61 cents to $112.45 a barrel.