Gas Prices Jump to $3.91 a Gallon, Heading to $4April 29, 2011
The average price for a gallon of gas in the U.S. is now within a dime of $4.
Drivers in 22 states are paying more than the national average of $3.91 per gallon. In Alaska, California and Connecticut they're paying $4.20 or more.
With one day left in April, gas prices are up for the month. On average, the increase has been slightly more than a penny per day. At that rate, the national average for gas would reach $4 on Sunday, May 8. In 2008, when gas hit a record of $4.11 per gallon in July, it didn't cost $4 until June 8.
Analysts predict gas prices will actually start falling toward the end of May, as refineries increase production and more gas becomes available. That remains to be seen: Many analysts failed to predict the prices drivers are paying now, caught off-guard by surging oil prices.
April's rise in gas prices is sobering news for the economy. On Friday, the government said that personal incomes rose in March, but much of the extra money went to pay for gas. Now a 20 gallon fill-up costs on average $6 more than it did on March 31, diverting money from clothing, groceries, take-out food and other spending.
The main reason gas is up is the high price of oil. It rose again Friday, boosted by a weaker dollar. The dollar hit a three-year low against six major currencies. Since oil and other commodities are priced in dollars, they become more attractive to buyers with other currencies and prices rise.
Benchmark crude for June delivery rose $1.07 to settle at $113.93 a barrel on the New York Mercantile Exchange.
Oil and gasoline futures have risen about 35 percent since mid-February when uprisings broke out in Libya and other countries in the Middle East and North Africa. Traders have been concerned about disruptions to oil supplies. So far, only Libya's daily production of 1.6 million barrels a day has been lost. Libya supplied less than 2 percent of the world's oil, most of it going to Europe. Saudi Arabia and other OPEC nations have covered much of the shortfall.
The latest increase in retail gas — 2 cents overnight — followed the shutdown of seven refineries in Texas, Alabama and Pennsylvania after severe storms this week. The shutdowns aren't expected to last more than a few days, but 750,000 to 1 million barrels a day of production has been interrupted, according to Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
The affected refineries mostly ship product to the Southeast, Midwest and Gulf Coast states, Kloza said. Motorists there will like see the biggest increases in pump prices.
Overall, economists say consumers continue to spend. But they know high gas and food prices are having an impact.
"The bad news is that consumer spending adjusted for inflation has lost the momentum it had in the last quarter of 2010," said Paul Dales, an economist with Capital Economics. .
Some economists think lower gas prices could encourage consumer spending in other areas, although the high unemployment rate will keep the economic recovery in low gear this year.
In other futures trading, heating oil rose 2.99 cents to settle at $3.2758 per gallon, gasoline futures gained 2.88 cents to settle at $3.3984 per gallon and natural gas rose 12.8 cents to settle at $4.761 on the Nymex.
In London, Brent crude rose 87 cents to settle at $125.89 on the ICE Futures exchange.
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