Retail gasoline prices in Arkansas jumped 7 cents in the past week, and motorists can expect them to continue to rise as spring nears, analysts said Thursday.
Higher crude oil prices and scheduled refinery closures for maintenance will push gasoline prices up in the coming weeks, said Don Redman, spokesman for auto club AAA.
“While we’re up 12 cents from a month ago, we’re about 44 cents cheaper than last year,” he said. The price peak varies each year, Redman said, and there’s a noticeable increase in the spring, “but last year, because we had refinery issues, we saw spring arrive early.”
The rise in gasoline prices will also likely affect consumers and businesses, Redman said.
“Obviously, when you start getting into [$3.50 gas prices] it definitely has an impact on the family budget,” he said. “Any kind of price hike by corporations is usually passed on to the consumer, and that probably will be reflected in deliveries and stores.”
The average price for a gallon of gasoline Thursday in Arkansas was $3.20, up from $3.08 a gallon a month ago. The national average was $3.38 a gallon, up from $3.28 a month ago, according to AAA’s fuel gauge report.
“The cold weather has really taken its toll, not only on heating fuels, but gasoline fuels,” said Phil Flynn, an energy analyst with Price Futures Group in Chicago. “On top of that, because of the [winter] storm and rising geopolitical risks, we have seen the price of oil rise and when oil goes up it always drives up gasoline.”
He said the protests in Venezuela, a key U.S. oil and gas supplier, and uncertainty about supply disruptions in Libya and South Sudan have also lifted oil prices.
“All of that is kind of playing against the market,” Flynn said.
On Thursday, the price of oil for March delivery dropped 39 cents to close at $102.92 a barrel.
Futures on the Intercontinental Exchange in London showed Brent crude, which is used by many refineries in the U.S., settling at $110.30 a barrel, The Associated Press reported.
Wholesale gasoline prices have remained relatively flat, but slowly increased by about20 cents in the past month, Redman said.
On Thursday, wholesale gasoline rose 2.2 cents to settle at $2.85 a gallon on the New York Mercantile Exchange.
Another factor driving up retail gasoline prices is the approaching transition period when refiners temporarily shut down.
“We are on the cusp of the refinery maintenance season,” said Tom Kloza, chief oil analyst with gasbuddy.com. “This will curb supply as demand is rising.”
During this time, refineries switch from winter-blend fuel to summer blend, which burns cleaner and is more expensive.
“It’s just more difficult to make,” said Kloza. “It’s almost like you have to make a gluten-free gasoline in some places.”
As the changeover occurs, companies also close their refineries temporarily to do maintenance or upgrade machinery.
Kloza said he expects gasoline prices to continue to increase over the next few weeks.
“Whatever you are looking at, know you might pay 15 to 20 cents more sometime between now and Easter Sunday,” he said.
“What you see in the next six weeks will be on the higher end” of gasoline prices expected during the year, Kloza said.
Business, Pages 28 on 02/21/2014