logo


Gradual Rise in California Gasoline Prices Expected
Friday, March 13, 2009 7:51 AM


(Source: The Sacramento Bee)trackingBy Mark Glover, The Sacramento Bee, Calif.

Mar. 13--Keeping up with crude oil prices these days is like watching a Red Bull-addicted jack rabbit.

The daily up-and-down gyrations have prompted widely varying predictions about future gas prices from exasperated energy analysts.

However, the middle ground of expert opinion is comparatively stable: Northern Californians can expect a gradual rise in gas prices this spring and summer, but nothing like the quick blast that sent the price of unleaded regular past $4.50 a gallon last year.

"I am probably less willing than all the pundits in the futures market to make a prediction (about gas prices), but I think we're looking at a gradual drift over the next five years," said Severin Borenstein, director of the University of California Energy Institute in Berkeley. "There's tremendous uncertainty in the economy, but I don't see (gas) prices heading up that quickly again. The recession is not going to let prices get up that high."

Borenstein and other experts expect gas prices to start inching up this spring.

For starters, despite the frantic dance of crude this week, energy investors believe oil prices are poised for a long-term recovery.

The price of crude for April delivery hit $47.07 a barrel Monday on the New York Mercantile Exchange, the highest level in two months, in anticipation of a production cut when the Organization of Petroleum Exporting Countries meets Sunday in Vienna. Some analysts predicted a cut of 500,000 barrels a day by OPEC, producer of about 35 percent of the world's oil.

On Wednesday, crude dropped to $42.33 a barrel as U.S. inventories swelled and some analysts wondered if OPEC is willing to make the cuts. On Thursday, crude spiked back up to $47.03, partly on rumors that oil-producing power Russia was ready to join OPEC in cutting production.

Crude is $100 off its $147-a-barrel high seen last July, but energy experts predict it will continue to rise above the general $40 average it traded at from December to February.

"Well, we know that prices are going to go up," said AAA spokesman Michael Geeser. "Obviously, as oil prices go higher, gas prices tend to follow."

Another factor affecting the state's fuel prices is the ongoing conversion to summer-grade gas. Refineries started their conversion to more expensive summer-grade fuel in February. The process takes a couple of months, driving up at-the-pump gas prices in varying degrees in past years.

In 2008, the spike was significant. AAA said the average price of unleaded regular was $3.12 on Feb. 4 last year. On May 5, it was $3.91.

"But it may not be as big this year," Geeser said.




(1)
 
3/19/2009 7:35:11 PM
by Julian
I agree with Severin Borenstein somewhat.  The economy is not going to let crude reach the $100 level for a while.  I do think that it could go higher this year, so I signed up with petrofix.  Locked in gas prices over the summer which I personally think is the risky area.
Rating: (0) (0)
Post Comment
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
   
 
 
 
 
   
 

Fundamental data is provided by Zacks Investment Research, market data is provided by AlphaTrade. , and Commentary and Press Releases provided by Quotemedia