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Entries in Crude (3)

Tuesday
May102011

Gas Prices: Why Won't They Drop?

Kevork Djansezian/Getty Images(NEW YORK) -- As the petroleum market spins its wheel of fortune daily, drivers can't seem to catch a break. Crude prices were headed ever upward before they crashed 15 percent last week, taking the worst weekly price beating since 2008.

Oil made up a bit of that ground on Monday but at the pumps, drivers have seen no relief from last week's tumble in crude oil prices.

The pump price of gasoline, also up slightly Monday, continues to fluctuate, seemingly unattached to the price of crude.  Not surprisingly, motorists are fuming.

The Department of Energy declared Monday that gas prices nationally have risen to a little less than $4 a gallon on average. Regions with the biggest price increases from a week ago included the lower Atlantic states and the West Coast, minus California.

Patrick DeHaan, senior petroleum analyst for GasBuddy.com, which tracks gas prices coast to coast, admits the fluctuations in the pump price of gas are "very difficult for people to understand." He explains why the recent decline in the price of crude didn't translate into cheaper gas: "The bottleneck is the refiners -- the middlemen."

At the same time that inventories of crude are increasing, inventories of gasoline are dropping. "For 10 consecutive weeks gas inventories have been dropping -- and now we're headed into the big summer driving season," says DeHaan.  Result: no price break for consumers.

Add to this a cresting Mississippi River and some unfortunate accidents of timing. A number of U.S. refineries were closed a year ago, when the price of gas was lower and refining was less profitable. Getting them back online takes time. Further, an electric power failure two weeks ago in Texas knocked out 4.4 percent of U.S. refining capacity.

Oil industry expert Andrew Lipow -- no conspiracy buff -- calls this simply "a confluence of events."  We've got crude aplenty, he says, but a diminished capacity to turn it quickly into gasoline.

There's another complication at work, says DeHaan.  Gas station owners respond one way when the wholesale price of gas is rising, but a different way when it falls.

"Stations are quick to raise their prices at the pump," DeHaan explains.  "They do it in anticipation that they themselves will have to pay more for their next wholesale load. Today's owner is looking at the numbers and seeing that the wholesale price is up maybe 20 cents a gallon. If he's going to have to buy 8,000 gallons, that's $16,000. Where is he going to get that? He can get it by raising retail prices quickly."

Copyright 2011 ABC News Radio

Wednesday
Mar232011

Oil Prices Continue to Rise; Stock Futures Up Wednesday

Comstock/Thinkstock(NEW YORK) -- There appears to be no end in sight for high oil prices.

The cost of crude rose again Tuesday, with West Texas crude moving up to $105 a barrel and Brent crude spiking to $115.  Prices have jumped more than 20 percent since protests spread from Egypt and Tunisia to other parts of North Africa and the Middle East.

The high price of fuel has caused United Continental and American Airlines to consider cutting flight schedules to save money.

Over in the stock market, futures in the U.S. are up slightly Wednesday after the Dow slipped 18 points the day before.  The Nasdaq and S&P also dropped eight and five points Tuesday, respectively.

In Japan, the Nikkei average dropped 1.7 percent Wednesday after rising more than four percent the day before.

Meanwhile, Toyota said it will delay the launch of the Prius hybrid minivan because of supply disruptions after the earthquake and tsunami that struck Japan earlier this month.  Toyota has halted car and truck production in Japan mostly because of supply shortages.

Copyright 2011 ABC News Radio

Wednesday
Mar022011

Stocks In the Green at Close, Crude Prices Spike, Jobs Outlook Is Good

Photo Courtesy - Getty Images(NEW YORK) -- It was bound to happen.  Oil has closed at over a $100 a barrel.  But upbeat news about jobs kept stocks in the plus column.

At the day's close the Dow was up nine points, the NASDAQ gained 11 and the S&P added two.

The spike in crude prices could be expected due to the fighting in Libya.  And with the demand here in the U.S. for petroleum, that could mean even higher prices at the gas pumps in the coming weeks.

Payroll processor ADP says private U.S. companies added more jobs (approximately 217,000) than expected last month, which suggests that Friday's monthly unemployment figures could be stronger than expected.

The Federal Reserve also released what it calls the "Beige Book," but the Fed's latest read on the economy shows a lot of just one color: green.  It says the economy expanded at a modest to moderate pace in all 12 of the nation's regions it surveys.

Copyright 2011 ABC News Radio







ABC News Radio