Prices at the Pump Up at Dawn, Some by 20 Cents
Some gas stations in Arkansas raised regular by 20 cents overnight as
record-setting oil futures gave retail prices a hefty boost Thursday.
The record state average of $3.52 for regular trailed those pacesetters
but nevertheless has risen 28 cents in the past month, according to
AAA. Another record was set nationwide at $3.645.
Sleepy Hollow Store in Gentry was selling regular for $3.75 after
receiving a higher-priced shipment Wednesday, according to the owner,
who declined to say how much the price went up. Other stations were
selling regular for $3.65.
Even at $3.54 at a Wal-Mart station in Rogers, it cost Brooke Mudd $62 to top off her Chevy Tahoe.
Mudd said she has started planning her shopping trips to Wal-Mart more carefully.
"I try to do all my shopping for the week at one time rather than just run back to the store every day," she said.
Phil Flynn, vice president and energy analyst for Chicago-based Alaron
Trading Corp., said, "It seems like you guys are playing catch-up with
the rest of the nation." Arkansas saw increases of only about 3 cents
in the past two weeks, whereas many other areas saw 15-cent increases,
Gasoline prices are reflecting record-setting crude oil prices, which
closed Thursday at $123.69 per barrel on the New York Mercantile
"It’s all about the crude," Tom Kloza, director of the Wall, N.J.-based
Oil Price Information Service, wrote in an e-mail. "That is what is
driving it." Oil prices were buoyed after Goldman Sachs analysts said
this week they expect a severe spike in oil, with prices reaching
between $150 and $200 per barrel. The same analysts were the first to
make a strong case in spring 2005, when crude averaged about $50, for a
"superspike" to $105 per barrel, Kloza wrote.
But it’s a self-serving prophecy for a company invested in the futures
market, said Judy Dugan, research director for Consumer Watchdog, an
advocacy group. Markets went up 2.5 percent when the analysts made the
2005 announcement, she said. "It seems self-fulfilling, and it brings
more money into speculative markets," Dugan said.
"The price of oil has to be brought under control before gas can come
down," Dugan said. She said the White House and Congress aren’t doing
enough to try to bring the prices down.
The spot price for wholesale gasoline at New York Harbor, a price that
many gasoline stations use as a price index, went up 25 cents
Wednesday, said James Williams, an energy economist who owns WTRG
Economics near Russellville. The spot price, which was $3.19 Wednesday,
is an average price of what distributors pay to buy shiploads of
gasoline, and most gasoline stations adopted pinning their price to
that market to avoid charges of price gouging, Williams said. That
price is before the federal 18-cent tax and the state’s 21-cent tax,
plus transportation and retail costs.
That price is very sensitive to the crude oil futures market, Williams
said. There’s only a 20-day supply of gasoline in the United States,
and companies have to raise their prices to afford the next, more
expensive, load of fuel.
"The system doesn’t take as long to adjust as people think it does,"
Williams said. Prices go up or down based on a number of factors, he
said. "Over the long term, it generally averages out," he said. "It
tends to go down almost as fast as it goes up." The U.S. Energy
Information Administration this week revised its short-term energy
outlook upward, with a new average gasoline price nationwide for the
year up 16 cents to $3.52. The agency expects prices to peak this year
in June nationwide at a $3.73 average.
Kloza wrote at his Web log, blogs.opisnet.com, that because of oil’s
spike this week, prices in other states should average between about
$3.60 and $4, with the nationwide average topping $3.70 in the next few
If Goldman Sachs’ prediction of $150 to $200 per barrel of oil comes
true, nationwide gasoline prices should average between $4.30 and
$5.60, Kloza said.
"These are just general ballpark numbers, and don’t take into account
refining `events,’ hurricanes or other threats to U.S. refining
infrastructure," Kloza wrote. "The 2008 price rise hasn’t been about
the U.S., and it hasn’t been
about refining. It’s been focused on the perception — not necessarily
the reality — that crude oil could be in short supply as the year
progresses." He doesn’t think oil will go to $150, "but that’s more
hope than faith given what has happened so far," Kloza added by e-mail.
Information for this article was provided by Stacey Roberts of the Arkansas Democrat-Gazette.