Sunday, March 23, 2008

Gasoline Pump Price in U.S. Rises to $3.26, Lundberg Says

By Jordan Burke and Victor Epstein

March 23 (Bloomberg) -- The average price of a gallon of regular gasoline at U.S. filling stations rose to $3.26, an industry survey showed.

The price climbed 7 cents on March 21 from two weeks earlier, according to oil industry analyst Trilby Lundberg's survey of 7,000 filling stations nationwide. Gasoline futures rose to $2.6051 a gallon on the New York Mercantile Exchange on March 20.

``Gasoline prices moved up 7 cents while crude oil prices lost about 8 cents per gallon equivalent during the same period,'' Lundberg said in an interview today. ``They moved in the opposite direction because ethanol prices were spiking, our spring demand is awakening and because refiners and retailers each took a little better profit margin.''

On March 12, gasoline futures rose to $2.7286 a gallon, a record closing price. The contract, which covers reformulated fuel ready to be mixed with ethanol, began trading in 2005.

AAA, the nation's biggest motoring club, said gasoline at the pump reached a record $3.285 a gallon on March 15.

Gasoline prices rose after crude-oil futures climbed to a record close of $110.33 a barrel on March 13. Oil prices increased as the dollar weakened to a record low against the euro. The euro climbed to $1.573 on March 17, the highest since the currency's debut in 1999.

The cost of crude oil determines about 68 percent of the pump price of gasoline, according to the Energy Department.

Consumer Confidence

Rising gasoline prices are taking a toll on consumers, whose spending makes up two-thirds of the economy. Consumer confidence sank to a 16-year low this month and Americans braced for higher inflation, with the economy teetering on the brink of a recession.

The total number of people receiving unemployment insurance rose to the highest since August 2004, the Labor Department said on March 20.

``This new price beats the previous inflation-adjusted high by about 2.5 cents,'' Lundberg said of the average price for a gallon of gasoline March 21. ``Back in May of 2007, the price was just over $3.18, but because of inflation it now looks like $3.24.''

The threat of recession and a credit freeze caused the Federal Reserve to cut its main lending rate by three-quarters of a percentage point on March 18.

Rising prices have caused demand for gasoline to fall 1.8 percent from a year ago to 9.07 million barrels a day, the U.S. Energy Department reported on March 19.

The highest average price for self-serve regular gasoline was $3.66 a gallon in San Francisco, Lundberg said. The lowest was in Newark, at $3.03 a gallon. On New York's Long Island, the price was $3.37 a gallon.

No comments: