Just seven days into the new year, pump prices have surged past 2009 highs as winter storms and a flood of speculative money send oil prices higher.
With the average gallon of gas is now a shade under $2.71, a typical motorist using 50 gallons of fuel a month will pay about $135 a month to fuel up. Last year at this time consumers were paying only about $85 per month.
There are early signs of a recovering economy and job figures due Friday may further that trend, yet consumers have pared way back on energy spending.
It’s not clear how much of an energy burden can be carried with unemployment hovering around 10 percent.
Americans are now spending about $1 billion a day on gasoline with most paying 90 cents to a dollar or more per gallon than they did a year ago.
In less than a month, crude prices have jumped 20 percent and yesterday peaked above last year’s high. That has dragged pump prices to new 15-month highs.
Gas prices in some coastal cities are already at or close to $3, and many energy experts believe that most of the nation will follow along this spring as refiners switch over to less polluting blends of gas as required by law.
Yet that scenario is heavily dependent on the fiscal health of the country in coming months, said Geoff Sundstrom of auto club AAA.
“With gasoline, much of that is going to depend on the ultimate strength of the economy in the spring and higher demand seasonally for fuel,” he said.
Demand for gasoline will come nowhere close to levels just two or three years ago, said Sundstrom.
Still, prices are rising fast; 7 cents in just the past week, according to AAA, Wright Express and Oil Price Information Service.
The run-up in gasoline prices has had nothing to do with demand for gasoline that is so weak that refiners have been shutting down operations and scaling back others. The government said Wednesday that refineries operated at just 79.9 percent capacity for the week ended Friday, well below historical averages.
In fact, winter storms have driven gasoline demand down sharply because people have been unable to drive.
Snow was piled so high in Iowa that drivers couldn’t see across intersections. North Dakota saw heavy snow. There were wind chills of 52 below zero in the Midwest Thursday. Temperatures plummeted in the South, threatening fruit crops.
The Energy Information Administration reported Thursday that 153 billion cubic feet of natural gas was pulled from storage last week, in line with estimates. But supplies remain well above average.
Benchmark crude for February delivery fell 38 cents to $82.80 a barrel on the New York Mercantile Exchange as the dollar rebounded.
Money has flooded into oil futures because the dollar has been so weak, making it cheaper for anyone holding stronger currencies to buy crude.
In other Nymex trading in February contracts, heating oil fell 1.04 cents to $2.1928 a gallon and gasoline dropped 0.68 cent to $2.1298 a gallon. Natural gas futures fell 1.9 cents to $5.99 per 1,000 cubic feet.
In London, Brent crude for February delivery fell 26 cents to $81.63 a barrel on the ICE Futures exchange.
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Associated Press writers Pablo Gorondi in Budapest and Alex Kennedy in Singapore contributed to this report.
