AAA: Gas Prices Jump Double-Digits In Two Week’s Time

Gasoline prices continued their upward movement in conjunction with crude oil’s recent surge above $80 a barrel. The national average price of regular grade gasoline began the month at $2.69 a gallon, only to increase 14 cents in two weeks to $2.83 Friday (a 5% increase). Friday’s average price was 34 cents higher than year ago prices, yet still $1.28 below record high prices set two years ago.
Crude oil prices have generally pushed higher throughout the month and although this week prices seemed to see-saw a bit, oil continued to trade above the $80 mark. Stronger stocks and a weaker U.S. dollar, which dropped to its lowest this year against many currencies, in addition to China’s increased oil imports, continued to contribute to oil’s late-week strength. The weakness of the U.S. dollar is viewed as perhaps the strongest factor contributing to recent growth, since oil is priced in dollars a weak dollar makes crude cheaper for those using other currencies to purchase it. Crude hit an intraday high of $84.12 Thursday before settling at $81.41 at Friday’s close.
This week the Oil Price Exporting Countries (OPEC) ministers unanimously agreed not to change output levels that have been in place for nearly two years. And while crude oil prices are slightly above the “ideal” $70 to $80 range, as noted by Saudi Arabia, OPEC’s minister said he was still happy with the current market.
In its weekly report, the U.S. Energy Information Administration’s (EIA) data showed crude oil inventories dropped 416,000 barrels to 360.6 million barrels, in contrast to the forecasted 1.1 million-barrel increase, yet far less than the American Petroleum Institute’s reported 4.1 million barrel drawdown. Gasoline stocks fell 1.8 million barrels to 218.2 million barrels, more than expected.
The Weekend
“Gas prices continue to be affected by the recent surge in crude oil prices, jumping double digits since the beginning of the month in most areas,” said Tracy E. Noble, Manager of Public and Government Affairs for AAA Mid-Atlantic. “The national average price of regular grade gasoline jumped 14 cents in the first two weeks of October, to $2.83 on Friday. However, most analysts maintain, barring any significant events, that there will not be a sizeable increase for consumers for the remainder of the year.”
The Week Ahead
In its winter fuel outlook the EIA expects crude oil to average about $80 a barrel this winter, a $2.50-per-barrel increase over last winter, and it forecasts prices will gradually rise to $85 per barrel by the fourth quarter of 2011 as U.S. and global
economic conditions improve.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)