AAA Says Gas, Crude Prices Are Moving Up

Retail gas prices are on the rise this week. The national average for regular unleaded jumps a nickel to $2.66, and Oregon's average gains two cents to $2.75.

Salem-News.com

(PORTLAND, Ore.) - Retail gas prices are on the rise this week, according to Oregon AAA. The national average for regular unleaded jumps a nickel to $2.66, and Oregon's average gains two cents to $2.75.

AAA Oregon Public Affairs Director Marie Dodds says, "The national average reached its low for the year just last week on February 17. But climbing crude prices have sent pump prices higher again."

Crude oil is trading around $79 per barrel today, up from about $77 a week ago. Oil prices did climb above $80 during a five-day rally, and continue to be driven largely by broader economic issues, including the widespread belief among investors that the Federal Reserve will keep interest rates low for some time.

Low interest rates can lead to a weaker U.S. dollar. Crude is bought and sold in dollars, and the weaker the dollar, the cheaper commodities such as oil become for investors using other currencies. That tends to drive up the price of crude. Oil prices fell today after a report showed the Consumer Confidence index fell sharply in February.

Crude oil prices have been mostly detached from the traditional fundamentals of supply and demand. Oil demand remains very sluggish in the U.S. and is showing only modest gains in other countries. Also, refining activity is down in the U.S., with the Energy Information Administration showing refineries running below 80 percent capacity for the first part of 2010. And U.S. retail gasoline supplies have a healthy cushion of nearly 27 days worth of gas in stock.

Another factor contributing to the jump in crude prices is the continued uncertainty over Iran and its nuclear ambitions. The issue involves several of the world's top oil producing and consuming nations and therefore directly impacts oil prices. Seasonal price trends may also be playing a role in the direction of prices. The spring driving season, a period traditionally marked by increased gasoline consumption, is just around the corner and investors may have begun factoring it into futures prices. Also, labor strikes at refineries in France may also be a factor in oil prices moving higher.

It will be worth watching oil prices in the coming days to see if prices will once again rise above $80 per barrel, a psychologically important price point for the markets. So far in 2010, the markets have not been able to sustain oil prices above $80, and crude has remained for the most part between $70 and $80 per barrel. If crude prices continue to show strength, pump prices will also climb.

Portland currently has the lowest average price in Oregon for a gallon of regular, with a reported average of $2.712. Salem is slightly higher, with an average of $2.732. The Medford/Ashland region is seeing an average of $2.775 for regular. Drivers in the Eugene/Springfield are paying a little more at $2.784. In Vancouver, Washington, motorists are paying an average of $2.832 for self serve regular.

Two states have averages for regular unleaded at or above $3 a gallon, same as last week, and the top five most expensive states are the same for the fourth consecutive week.

Hawaii has the most expensive gas for the sixth week in a row at $3.43, followed by Alaska at $3.33, California at $2.93 (same as last week), New York at $2.86, and Washington at $2.84 (up three cents and fifth most expensive for the fourth week in a row).

Oregon is tenth, up from 12th last week. Missouri is the state with the least expensive gas for the fifth week in a row at $2.46.

Diesel prices are up slightly. The national average gains three cents to $2.85, and Oregon’s average also rises three cents to $2.87.

Hawaii has the highest statewide average price for diesel again this week at $3.91, followed by Alaska at $3.64, Connecticut at $3.11, New York at $3.11, and District of Columbia at $3.06.

Washington's average diesel price increases nearly four cents to $3.01 and is ninth highest, up from 11th last week.

Oregon's average is 23rd, up from 24th last week. A year ago, the national average for diesel was $2.26 and Oregon's average was $2.40.

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Source: Oregon AAA