Weak dollar driving up gas prices
BY SUSAN SALISBURY
Palm Beach Post
For many motorists, it's time to play ``let's find the cheapest gas price'' game. While driving around in search of cheaper fuel might not make much sense, gasoline prices have increased more than 25 cents a gallon in the last month.
Friday, the average for regular in Miami stood at $2.77, up from $2.48 a month ago; Broward was also $2.77, up from $2.46 and Palm Beach County was at $2.80, up from $2.54.
What's causing the surge? Blame the weak dollar and increasing global demand for crude oil, plus speculative trading, experts say. Since oil is bought and sold in dollars, it's cheaper when the dollar is down. That in turn draws speculators, who drive up the price.
Gasoline prices are most likely still heading up a little more and expected to stabilize soon.
``Prices still have a bit of upward momentum, which is nothing more sophisticated than retail catching up to wholesale,'' said Tom Kloza, chief analyst, Oil Price Information Service, Wall, N.J. ``I still believe we are cresting, and in the eighth or ninth inning of the gasoline rally.''
`UP, UP, UP'
Steve Amodie, co-owner of Florida Gardens Sunoco, west of Lake Worth, is witnessing that momentum, and customers' gripes.
``The price is going up, up, up. It has gone up every single day,'' Amodie said.
Amodie said higher prices are the last thing gas station owners want. After he pays the credit card companies their fees, he's making just six cents a gallon. Thursday afternoon, the station's gas price increased to $2.85 a gallon from $2.79.
Kloza doesn't think gasoline will hit $3 a gallon in Florida or most markets.
``But then again, I think that current levels represent excess in crude oil valuations, and one never knows where excess will end,'' Kloza said.
Tancred Lidderdale, an analyst with the Energy Information Administration, Washington, said the gas price hikes were driven by crude oil prices which peaked on Oct. 21 at $81 a barrel, then fell back below $80. Oil prices fell to below $78 a barrel Friday on a stronger dollar and worries that a drop in consumer spending might make the U.S. economic recovery unsustainable.
Every $1 change per barrel translates to a 2.4 cents per gallon change in the price of gas, Lidderdale said.
``It is hard to say when it is going to peak,'' Lidderdale said of gasoline. ``We don't see it rising another 20 cents. The forecast of oil and gas prices remains extremely uncertain because of the uncertainty about the economy. Even though we are seeing some good news in the economy, there is still an expectation that unemployment rates could inch up.''
EXPECTATION
With crude oil prices stabilizing in the last week, the expectation is that gas prices will level off too, Lidderdale said.
Higher gas prices of course, can't be good for the economy. It means less money left in consumers' pockets for other expenses.
In November 2008 when the nation's average gas price was $2.11 a gallon, Americans used 8.9 million barrels a day, which cost them $23.8 billion a month, Kloza said. At $2.75 a gallon, and 9 billion gallons a day, consumers will spend $32.6 billion a month.
What's ahead over the next couple of months depends largely on the value of the dollar and the weather, said AAA Auto Club South spokesman Gregg Laskoski.
``If extreme cold weather arrives sooner than expected or lasts longer than expected, that can place pressure on refineries as they attempt to meet increased demand for heating oil and possible increased demand for diesel and gasoline,'' Laskoski said.
BY SUSAN SALISBURY
Palm Beach Post
For many motorists, it's time to play ``let's find the cheapest gas price'' game. While driving around in search of cheaper fuel might not make much sense, gasoline prices have increased more than 25 cents a gallon in the last month.
Friday, the average for regular in Miami stood at $2.77, up from $2.48 a month ago; Broward was also $2.77, up from $2.46 and Palm Beach County was at $2.80, up from $2.54.
What's causing the surge? Blame the weak dollar and increasing global demand for crude oil, plus speculative trading, experts say. Since oil is bought and sold in dollars, it's cheaper when the dollar is down. That in turn draws speculators, who drive up the price.
Gasoline prices are most likely still heading up a little more and expected to stabilize soon.
``Prices still have a bit of upward momentum, which is nothing more sophisticated than retail catching up to wholesale,'' said Tom Kloza, chief analyst, Oil Price Information Service, Wall, N.J. ``I still believe we are cresting, and in the eighth or ninth inning of the gasoline rally.''
`UP, UP, UP'
Steve Amodie, co-owner of Florida Gardens Sunoco, west of Lake Worth, is witnessing that momentum, and customers' gripes.
``The price is going up, up, up. It has gone up every single day,'' Amodie said.
Amodie said higher prices are the last thing gas station owners want. After he pays the credit card companies their fees, he's making just six cents a gallon. Thursday afternoon, the station's gas price increased to $2.85 a gallon from $2.79.
Kloza doesn't think gasoline will hit $3 a gallon in Florida or most markets.
``But then again, I think that current levels represent excess in crude oil valuations, and one never knows where excess will end,'' Kloza said.
Tancred Lidderdale, an analyst with the Energy Information Administration, Washington, said the gas price hikes were driven by crude oil prices which peaked on Oct. 21 at $81 a barrel, then fell back below $80. Oil prices fell to below $78 a barrel Friday on a stronger dollar and worries that a drop in consumer spending might make the U.S. economic recovery unsustainable.
Every $1 change per barrel translates to a 2.4 cents per gallon change in the price of gas, Lidderdale said.
``It is hard to say when it is going to peak,'' Lidderdale said of gasoline. ``We don't see it rising another 20 cents. The forecast of oil and gas prices remains extremely uncertain because of the uncertainty about the economy. Even though we are seeing some good news in the economy, there is still an expectation that unemployment rates could inch up.''
EXPECTATION
With crude oil prices stabilizing in the last week, the expectation is that gas prices will level off too, Lidderdale said.
Higher gas prices of course, can't be good for the economy. It means less money left in consumers' pockets for other expenses.
In November 2008 when the nation's average gas price was $2.11 a gallon, Americans used 8.9 million barrels a day, which cost them $23.8 billion a month, Kloza said. At $2.75 a gallon, and 9 billion gallons a day, consumers will spend $32.6 billion a month.
What's ahead over the next couple of months depends largely on the value of the dollar and the weather, said AAA Auto Club South spokesman Gregg Laskoski.
``If extreme cold weather arrives sooner than expected or lasts longer than expected, that can place pressure on refineries as they attempt to meet increased demand for heating oil and possible increased demand for diesel and gasoline,'' Laskoski said.
