Gasoline prices rise in California, most of U.S.
Retail gasoline prices rose in California and most of the nation during the last week, but a decline in Midwest prices pulled the national average lower, the Energy Department said. The fuel price averages for California and the U.S. are far above the records for January that were set just last year.
In California, the average cost of a gallon of regular gasoline Monday was $3.714, up 1.4 cents from the previous Monday, according to the Energy Department’s weekly survey. The latest average was 35.7 cents a gallon higher than the state’s old record for this week.
Nationally, a 5.5-cent drop in the Midwest was enough to lower the national average by two-tenths of a cent for the week to $3.389 a gallon. That’s still 27.9 cents a gallon higher than the record set a year earlier.
Price relief may be a long way off. U.S. refineries have begun the year with a new record for fuel sales overseas, according to the Energy Department. Exports of refined fuels in 2012 are running at about 2.9 million barrels a day, an increase of more than 30% over last January and a jump of more than 50% since 2010.
U.S. refiners have found more lucrative deals overseas. They also have been mothballing domestic refineries at a pace that had the Energy Department warning that gasoline supplies in the U.S. may be squeezed further this spring as demand increases.
The Energy Department said in its most recent weekly petroleum report that “the recent idling of two refineries in southeastern Pennsylvania and previously announced plans to idle an additional refinery in the region by mid-2012 would, taken together, reduce operating refinery capacity along the entire East Coast by 27%.”
Lower refinery capacity could lead to more pain at the pump this spring, oil analyst Phil Flynn of PFGBest Research said.
“Whenever you reduce refinery capacity,” Flynn said, “you have the increased possibility of price spikes because you have fewer resources to fall back on in the event of a refinery disruption or an emergency.”
In New York futures trading, oil prices hovered near $100 a barrel amid continuing tensions with Iran.
The European Union said that it would stop importing Iranian oil in July, and Iran again threatened to close the strategic Strait of Hormuz. Oil shipments by supertankers through the narrow strait between Iran and the United Arab Emirates account for roughly one-third of all seaborne crude transport and 20% of all oil traded worldwide, the Energy Department said.
Crude prices on the New York Mercantile Exchange rose $1.25 to $99.58 a barrel. European crude traded for $110.58 a barrel in London, up 72 cents.