Arkansas’ average price for a gallon of regular gasoline this weekend broke the record of $3.18 set in May at the same time the national average set a record at $3.28, according to AAA.
An average gallon of regular cost $3.188 in Arkansas, exceeding the previous high of $3.180. Regular across the country averaged $3.287.
"I would say hold onto your wallet, because we’re not seeing any dramatic decreases in gasoline prices in the near future," said Mike Right, spokesman for AAA.
With oil more than $100 a barrel, refineries start their switch from winter to summer fuel blends today, Right said, which, historically, pushes prices up.
Beyond that, "it probably isn’t the end of high prices, because we haven’t gotten into heavy drive season yet," Right added.
Prices are up 25 percent from a year ago, when Arkansans were paying an average of $2.542 for regular. Crude oil prices for the third week in March were up about 70 percent, from $61 a barrel a year earlier, according to the U.S. Energy Information Administration.
U.S. gasoline stocks are at 229.2 million barrels, still near a 14-year high and nearly 20 million barrels more than a year earlier, according to the agency.
At the same time, gasoline demand was down 1.5 percent in the week ending March 21, compared with a year ago.
Rising prices "should come by virtue of supply, not demand," Tom Kloza, director of the Wall, N.J.-based Oil Price Information Service, wrote on his Web log, blogs.opisnet.com. Refiners are processing less crude oil than they have since hurricanes in 2005 knocked out much of the refining capacity, Kloza wrote.
The low rates of production and the "inevitable problems" that come with restarting refineries after spring maintenance will lead to lower supplies, he said, and therefore higher prices.
Oil companies made record profits in the fourth quarter of last year because of the high price of crude oil, said Judy Dugan, research director for Consumer Watchdog, an advocacy group. "Now, they’re still making record profits on oil,
but we’re also seeing refining profits moving upward," Dugan said.
But in the near future, there could be a short-term easing in gasoline prices because oil is down, said James Williams, an energy economist who owns WTRG Economics near Russellville. "The big problem with the gasoline prices right now is the oil, not the refining costs," Williams said.
Crude oil for delivery in May closed at $101.58, down $4.04, on the New York Mercantile Exchange on Monday. Wholesale gasoline, also for May delivery, closed down 9 cents at $2.63.
Phil Flynn, energy analyst for Chicago-based Alaron Trading Corp., said that if oil prices were to continue to fall as they did Monday and get back into a range of $80 or $90 per barrel, fuel prices won’t go up much more.
However, Williams said it’s a "pretty erratic market" at the moment.
Because of the weak economy, investors have been hedging against the falling dollar by investing in commodities, such as oil and gold. But last week saw prices start to come down as investors gained more faith in the economy, Flynn said. Oil has fallen from a high of more than $110 a barrel. Gold and other commodity prices are also down, he said. As far as commodities go, "if we haven’t popped the bubble, we’ve certainly seen a lot of air let out," Flynn added.
The Fayetteville and Fort Smith metro areas were still 15 cents under their records of $3.341 and $3.355, respectively, set May 22. Little Rock was at $3.170; Pine Bluff $3.198; and Texarkana $3.154, each a cent or two shy of their records.
Gasoline prices are also playing a factor in consumer confidence.
According to the Reuters/University of Michigan Surveys of Consumers, the Index of Consumer Sentiment was at 69.5 in March, on a scale of 100. That’s down from 88.4 in March 2007 and a peak in January 2007 of 96.9.
Richard Curtin, director of the report, said in an e-mail that the lower the household income, the bigger factor gasoline prices play in consumer confidence.
"The finances of lower income households have been devastated by high fuel and food prices," he wrote.
Dugan of Consumer Watchdog said, "There’s little that the individuals can do, aside from trying to reduce their own usage."