Gasoline prices could increase up to 15¢ a gallon, expert says
Gasoline prices may soon break May’s record.
NEW YORK (AP) — Millions of Americans planning car trips for the Thanksgiving weekend are finding they need to once again factor soaring gas prices into their budgets.
Gas at the pump is within striking distance of May’s record of $3.227 a gallon, having risen 0.6 cent overnight to a national average of $3.111, according to AAA and the Oil Price Information Service. Fred Rozell, retail pricing director at the service, said gas may rise another 10 to 15 cents a gallon in the coming weeks as it catches up with oil prices that have soared close to $100 a barrel.
“We think there’s room for the price nationally to set a new record,” said Geoff Sundstrom, an AAA spokesman.
Oil futures, meanwhile, rebounded Wednesday after a sharp decline the previous session as investors started questioning whether OPEC will increase production. Light, sweet crude for December delivery rose $2.92 to settle at $94.09 a barrel on the New York Mercantile Exchange after a $3.45 drop Tuesday.
Americans are starting to feel more pain from fuel costs because they are rising as a percentage of income.
According to a new Oil Price Information Service study, it now costs 3.8 percent of median household income to fuel a single vehicle, up from 1.9 percent in 2002.
Those percentages are dramatically higher in the South and Midwest. The average household in Wilcox County, Ala., for instance, spends 12.7 percent of its income fueling each vehicle, compared with the 1.52 percent the average household in Hunterdon County, N.J. spends.
Rozell believes consumers are starting to cut back on their driving.
“Retailers that I’ve been talking to have been saying that demand ... is down or flat,” Rozell said, predicting that demand for gasoline will fall first in the South and Midwest.
“Unfortunately, this price increase, for a lot of Americans, is going to be very difficult this year,” Sundstrom said.
On average, families may find themselves spending an additional $80 to $90 a month on gasoline this holiday season, he said. Many people will find they can’t cut the amount they drive, and so will spend less on other things, Sundstrom said.
Sundstrom cautioned that if oil drops below $90 a barrel, the predictions of record gas prices might not come to pass. But crude’s rebound Wednesday again raised the prospect that prices could rise to $100 a barrel, or higher. Oil peaked at $98.62 last week.
Prices rose Wednesday after OPEC Secretary General Abdalla Salem el-Badri said there is no need for the Organization of Petroleum Exporting Countries to add more oil to the market, according to Dow Jones Newswires.
Oil prices fell earlier this week in part as a result of comments from Saudi Arabia’s oil minister suggesting that the cartel will discuss raising production at a meeting next month.