Cheap gas is history, again

Americans feel the squeeze of higher pump prices, although there's little chance of a repeat of last summer's record.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Aaron Smith, staff writer

How effective do you think the Geithner plan to spur lending will be?
  • It's enough to do the job
  • It's a start, but more aid will be needed
  • It won't work

NEW YORK ( -- The days of cheap gas are retreating into the rearview mirror, as prices continue to roll uphill, flirting with the $2-per-gallon mark.

The national average price for a gallon of unleaded gasoline reached $1.952 Thursday, according to the motorist group AAA. This is bad news for the growing ranks of jobless Americans, who are pinching pennies and looking for ways to cut costs.

The current price would have been welcomed by summertime drivers, because it's less than half the all-time high of $4.114 per gallon, achieved last July 17.

But since gas prices slumped to a low of $1.616 per gallon on Dec. 30, they've jumped more than 20%. At their current rate, prices could easily eclipse $2 per gallon by early next week.

This is occurring as crude oil prices head in the opposite direction, falling below $35 a barrel.

"I think what you're seeing now is a backlash of a period, from the end of the summer until the end of the year, when refiners were selling gas into the consumer market at a discount to crude oil," said Ben Brockwell, director of data pricing for OPUS.

Brockwell said refineries lost money last year, despite the surge in gas prices. The refineries in the latter half of 2008 were paying top dollar for oil, and then producing gasoline in a low-demand economy, he said. Now, refineries are producing less, driving up prices in even this low-demand economy, while stockpiling discount oil, he said.

It's hard to tell how this impacts Americans, who have been cutting back on driving since last year, and who have avoided the gas-guzzling larger vehicles, said Moody's chief economist John Lonski.

"You'd rather see energy prices lower, but it doesn't serve right now as one of the primary worries that affects consumer spending," said Lonski. "I would think that of the list of things to worry about, it does not yet rank as high as it did this spring or early summer, when gas prices were at stratospheric levels."

Robert Sinclair, spokesman for AAA in New York, where the price of unleaded averaged $2.09 a gallon, said, "Driving levels are already pretty low, with the downturn on the economy and people holding onto their pennies and worrying about the future."

But gas prices will probably keep going up, as they often do in late winter and early spring, when refineries traditionally conduct annual maintenance on their facilities, said Peter Beutel of energy risk firm Cameron Hanover.

The silver lining for consumers is that, because of lower demand, prices are unlikely to return to their sky-high levels from last year, according to Beutel.

"I think this market is going to have a very tough time getting over $2.35 [per gallon of unleaded by Memorial Day] just because there are so many people out of work and the economy is having such as difficult time going forward," he said. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.