NEW YORK (AP) — The average price of gasoline is now above $4 per gallon in five states, and it could rise to that level in New York and Washington, D.C., this weekend.
The $4 mark is a tough reminder for American drivers. The last time they saw prices that high was in the summer of 2008, just before the economy went into a tailspin. Retail surveys show that motorists are already starting to buy less fuel, yet the government expects pump prices to keep climbing this summer.
The national average has increased for 24 straight days, hitting $3.82 per gallon on Friday. Motorists in Connecticut, Illinois, California, Hawaii and Alaska now pay more than $4 per gallon. A gallon of regular cost an average of $3.979 in New York and $3.999 in Washington, D.C.
The rapid increase at the pump follows a parallel rise in oil. Oil, which has been rising slowly since 2009, gained momentum as the Libyan rebellion effectively shut down its exports. Crude has jumped 28 percent since the uprising began in the middle of February.
Oil fluctuated this week amid uncertainty about how much higher it could go, and it resumed its climb on Friday. It rose 94 cents to $109.05 per barrel in morning trading on the New York Mercantile Exchange. In London, Brent crude added $1.40 at $123.40 per barrel on the ICE Futures exchange.
Some traders and analysts expect oil to keep rising this year, arguing that the Libyan crisis will continue to constrict world supplies. Libya provided less than 2 percent of global demand. The world may still enjoy a surplus of crude, but experts say OPEC would struggle to keep up with demand if another conflict hampers oil production elsewhere.
Others point to retail surveys and industry reports that suggest Americans have started to buy less fuel, which could bring down the price.
“The biggest problem is that the data is not that reliable in the short term,” said Michael Lynch, president of Strategic Energy & Economic Research. “And when you’re in a bull market like this, people will talk themselves out of negative news. They’ll say any drop in demand is an aberration: People aren’t burning their SUVs just yet, and the economy hasn’t collapsed.”
Experts say crude could remain in a holding pattern while the market awaits further evidence about how consumers are handling higher prices.
This week, benchmark crude has mostly moved against the dollar. Oil, which is traded in dollars, tends to rise when the dollar weakens and makes crude barrels cheaper for investors holding foreign currency. It tends to fall when the greenback moves in the opposite direction.
In other Nymex trading for May contracts, heating oil rose 4 cents to $3.2285 per gallon and gasoline gained 5 cents at $3.2821 per gallon. Natural gas picked up a penny at $4.220 per 1,000 cubic feet.
Copyright © 2011 The Associated Press. All rights reserved.
