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, Flynn said.
Gasoline prices are reflecting record-setting crude oil prices, which closed Thursday at $123.69 per barrel on the New York Mercantile Exchange.
"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 days.
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.