The Surge in Oil
Oil has increased 20% since the beginning of the year. The surge in oil had cooled off recently as industry groups monitored the effect of higher prices on petroleum demand and the global economy.
The International Energy Agency said that they see signs that consumers are using less fuel as prices rise. Retail surveys by MasterCard show that motorists have cut back on gasoline purchases for weeks.
Oil rose Wednesday as the dollar lost ground to the euro, the British pound, and other major currencies. Oil, which is priced in dollars, tends to rise as the dollar falls. That makes crude contracts cheaper for investors holding foreign currency.
Refineries used more crude to produce gasoline and other products while crude imports declined. The decline in imports suggests refiners were unwilling to bring in higher-priced foreign barrels.
The national average increased slightly on Wednesday to $3.837 per gallon. A gallon of regular is 28.8 cents higher than it was a month ago and 97.8 cents higher than a year ago.
Experts believe pump prices should increase a little more this summer as refineries switch more expensive gasoline blends. Summer blends already account for roughly 80% of the gasoline sold. They do not believe the price of gas will reach $4.00 a gallon, and if it does it will be short lived.
Heating oil added 6.29 cents to settle at $3.2214 per gallon and gasoline futures increased 4.42 cents to settle at $3.2773 per gallon. Natural gas gained 4.8 cents to settle at $4.310 per 1,000 cubic feet.
The drop in gasoline supplies may have more to do with many refineries along the East Coast being on hold for routine maintenance and other issues. Nevertheless, gas prices are hitting American’s pockets harder than ever.