Gas prices: Up 24 cents in 8 days

March 3rd, 2011 by Staff

NEW YORK (CNNMoney) — Gas prices continue to rise for the eighth day in a row, as the effect of high oil prices trickles down to the pump.

The national average price for a gallon of regular gasoline rose 1.2 cents Wednesday to $3.387, according to a daily survey from motorist group AAA. Prices have jumped 23.6 cents over the past eight days.

Drivers in Hawaii continue to pay the highest prices in the nation, with the average price per gallon at $3.80. The lowest gas prices are in Wyoming, where drivers pay $3.09 a gallon on average.

Gas prices vary widely from state to state based largely on local tax rates. But prices have been trending higher nationwide following a rise in the price of crude oil, the main ingredient in gasoline.

Oil prices rose back above $100 a barrel Wednesday as jittery investors watched the political unrest unfolding across the Middle East, source of much of the world’s crude supply. Oil prices jumped nearly 7% in February.

Don’t call us gougers
Gas station owners and others argue that the rise in oil prices is due to speculation that the turmoil in Libya, which follows popular uprisings in Egypt and Tunisia, could disrupt cause supply disruptions.

As gas prices rise, economists warn that consumers could begin driving less and cut back on spending. That would be problematic for the shell-shocked U.S. economy, which is driven largely by consumer spending.

Despite the rise in gas prices, demand for large pickups and SUVs actually increased last month.

Top automakers reported February sales figures Tuesday that beat analysts’ expectations, with truck sales up 32% — the best sales rate since before the financial meltdown.

One Response

  1. CocoLoco

    You can be that when the oil companies start reporting record profits for the current quarter, they will be blasted by the Obama Administration and painted as villains. But should the blame of the rising price of oil and the profit taken on the backs of the consumer go beyond big oil?

    I decided to sit down and speak with oil trader veteran Dan Dicker. Dan was an oil for trader of the New York Mercantile Exchange for 25 years and is the author of the forthcoming book, “Oil’s Endless Bid: Taming the Unreliable Price of Oil to Secure Our Economy”.

    LL: How would you rank the blame game when it comes to the rising price of oil?

    DD: I would put the investment banks first. They have created and sold the instruments for retail investors and institutional investors to easily bet on the price of oil. The three largest investment banks trade in oil as well and make a couple of billion dollars each trading oil a year, which directly comes out of the pockets of consumers.

    The investor is next to be blamed. They have fallen to a large degree for indexes and commodity ETFs. These new participants are exclusively buying; no one is selling and Everyone wants to hold. They understand the importance of crude in the global economy. The oil market was relatively stable until the commodity market was allowed to expand with the passage of the Commodity Futures Modernization Act in 2000. We have seen enormous swings both up and down since then, and barring intense intervention, we will continue to see very volatile moves.

    LL: What about big oil?

    DD: The oil companies of course also trade oil but the truth of the matter is it is the expanded commodity market and the day traders, hedge funds and ETFs that are driving the price of oil far more today than the oil companies.

    LL: Where do you see the price of gasoline going as a result of the rise in crude?

    DD: It’s a very good possibility we will see four dollars come this Summer’s driving season. There is nothing I see to slow down that trajectory down. Last time it took the threat of a global melt down to stop the price rise. We don’t have that now. We will see a steady rise.

    LL: What about crude. Will we go back to 75-80 a barrel if and when this turmoil subsides?

    DD: No. Even if it quiets down we will not go back to 75 to 80 a barrel. There is an underlying layer of money that has found oil as a useful long term investment, and its not leaving the market so soon.

Leave a Comment

Please note: Comment moderation is enabled and may delay your comment. There is no need to resubmit your comment. You are free to voice your opinion but please keep it clean. Any comments using profanity will be rejected.