Gasoline may surge when travel picks up
Purchasing staff -- Purchasing, 2/7/2005 3:05:00 PM
Gasoline prices rose more than 7% in January, which typically is one of the slowest driving months of the year. That's causing leading experts to predict pump prices may surge past last year's record highs when highway travel picks up late in the spring. Government figures show that the average price of regular unleaded has risen in each of the last four weeks, jumping from $1.78 at the start of the year to $1.91 a gallon in the week ending Jan. 31. That's more than 30¢/gallon higher than a year earlier.
At the start of January, gasoline futures traded at $1.13 per gallon on the New York Mercantile Exchange. By the beginning of February, futures prices had jumped 16%. Last year, the average price peaked above $2 a gallon in May, just before Memorial Day, which is the unofficial start of the summer driving season. To be just a dime short of that level in early February is not good news for motorists. Carl Larry, head of energy futures at Barclays Capital in New York, expects retail gasoline prices to rise above last year's peak due to rising demand for fuel and the higher price of crude oil, from which gasoline is refined. "We're starting to see the economy come back, so demand can only go higher from where it's at," Larry says. He says gasoline prices could be propelled higher this spring by fears about the nation's growing dependence on imports and the possibility of supply-chain snags as refiners temporarily shut down, or turn around operations in order to shift production from winter-grade fuel to cleaner-burning summer blends. Tom Kloza, director of Oil Price Information Service in Lakewood, N.J., also anticipates that the price of gasoline will "rocket higher in the next 90 days." Nationally, Kloza predicts average gasoline prices could surpass $2.15 and even run as high as $2.50.
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