Gas jumps 21 cents in week

Price of petrol in state goes up 33 days in a row


A man prepares to gas up for $3.64 a gallon at an Exxon station at Broadway and I-30 in North LIttle Rock Tuesday afternoon. Arkansas average rule price have jumped nearly $.50 a gallon in the past month.
A man prepares to gas up for $3.64 a gallon at an Exxon station at Broadway and I-30 in North LIttle Rock Tuesday afternoon. Arkansas average rule price have jumped nearly $.50 a gallon in the past month.

— Arkansas motorists have seen prices climb at gas pumps for 33 consecutive days as an annual increase in prices started early this year, energy analysts said.

The average price of a gallon of regular unleaded gasoline in Arkansas on Tuesday was $3.62, up from $3.14 a month ago. At the same time, the national average price jumped from $3.30 to $3.75, according to AAA’s Daily Fuel Gauge Report.

“We are at unprecedented prices for this time of year, to see that run-up in prices in February,” said Don Redman, spokesman for AAA. “We are seeing this dramatic run-up in prices right now.”

In the past week, the average price of a gallon of gasoline rose 21 cents in Arkansas and 15 cents nationwide, according to AAA.

Analysts say consumers are seeing a spike in gasoline prices because of refinery closures, the approaching change to summer-blend fuel and high crude-oil prices.

Refineries normally close for maintenance in January and February because the demand for gasoline is normally low, but shutdowns have increased this year because of operational matters and Hurricane Sandy, said Phil Flynn, senior energy analyst for PFG Best.

“Because of all of these refinery issues, we are seeing this switch sooner than normal,” he said. “It really has been bad luck.”

Refineries are also preparing to make the transition from winter-blend fuel to summer blend, which burns cleaner. As this change occurs, refineries temporarily close, resulting in a downtime that slows output, Redman said.

“Even though our gasoline inventory is healthy, investors looking down the road, four to six weeks from now, are looking at refineries that will not be making gasoline,” he said.

That’s because gasoline inventories are normally depleted ahead of the change to summer blends in April and May.

Redman said it is unusual to see prices increase this early in the year and that demand for gasoline has been “very, very sluggish.”

“We are truly in uncharted territory,” he said.

“Many analysts don’t feel like they know what is causing it.”

High crude-oil prices are also pushing retail prices higher, said James Williams, an energy analyst and owner of the consulting firm WTRG economics near Russellville.

He said tensions in the Middle East and North Africa continue to sustain high crude-oil prices because of worries about supply disruptions.

‘GEOPOLITICAL UNCERTAINTY’

Williams said concerns about the United States and European economies have also weighed on oil prices.

“We have a lot of geopolitical uncertainty,” he said. “A lot of it is political tension, a specific amount is sanctions on Iran.”

Constant concern about Iran’s nuclear program inflated oil prices last year as the United States enforced sanctions to curb the amount of oil coming from Iran. Prices also jumped when Iran threatened to block oil shipments through the Strait of Hormuz.

About 17 million barrels ofoil flowed through the strait in 2011, according to the Energy Information Administration, which is part of the U.S. Department of Energy.

On Tuesday, West Texas Intermediate oil futures for March delivery increased by 80 cents to settle at $96.66 a barrel on the New York Mercantile Exchange.

April futures for West Texas Intermediate oil settled at $97.10.

Brent Oil futures for April delivery gained 14 cents to settle at $117. 52 a barrel in London.

Wholesale gasoline for March delivery fell 1.33 cents to settle at $3.12 a gallon onthe New York Mercantile Exchange.

Redman, with AAA, said many analysts think retail gasoline prices could settle in March instead of April and May, as they traditionally do, because of the early run-up in prices.

“We hit the peak early and will start seeing the prices come down,” he said.

Flynn said he expects prices to fall by Easter or the end of March.

“Whether or not we will get a big break really depends,” he said.

“I do really think the runup in prices should break big.”

Front Section, Pages 1 on 02/20/2013

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