Little Relief at the Pump This Labor Day
NEW YORK - The big spike in gasoline prices is just about over, but it's too late to bring much relief for Labor Day weekend.
The national average price for gasoline inched up just 0.3 cents Friday to $3.83 per gallon, ending a string of dramatic increases caused by Hurricane Isaac.
"We're in the ninth inning of this," said Tom Kloza, chief oil analyst at the Oil Price Information Service.
Still, drivers will pay the highest pump prices ever for this time of year.
The sky-high prices are keeping people like David Keup of Cedarburg, Wis., home. He was planning to visit a few friends near Coleman, Wis. this weekend, but now he's going to abandon the 285-mile round trip.
"It's not worth the added expense," he said.
Isaac, now slowly disintegrating over the middle of the country, forced several Gulf Coast refineries to shut down or operate at lower rates. This is deprived markets of millions of gallons of gasoline and sent prices sharply higher.
The storm pushed the national average gasoline price up 10 cents per gallon in one week, including a 5 cent gain Wednesday that was the biggest one-day gain since February of 2011.
But the price surge appears to be over. Kloza expects average gasoline prices to creep higher during the weekend then start falling after Labor Day, the last big driving weekend of the summer.
Pump prices were on the rise even before Isaac arrived. The average gasoline price rose about 40 cents from July 1 to mid-August because of refinery problems in the Midwest and West Coast, and sharply higher crude oil prices.
Crude has traded between $94 and $97 per barrel for two weeks, after rising from a low near $77 in late June.
On Friday U.S benchmark crude rose $1.85 to end at $96.47 per barrel after Federal Reserve Chairman Ben Bernanke made clear in a speech that the central bank will do more to revive the U.S. economy.
Brent Crude, which is used to price oil used by many U.S. refiners, rose $1.92 to $114.57 per barrel.
In a speech at an annual Fed conference in Jackson Hole, Wyo., Bernanke said the economic recovery is "far from satisfactory" but he did not give any timetable for action that might reduce borrowing costs and help stimulate growth.
If the Fed reduces the cost of borrowing, it could boost demand for the energy needed to fuel growth and make oil and other commodities more attractive investments.
"With interest rates near zero, people look for somewhere to put their money. One of those places is the oil market," said energy analyst and consultant Jim Ritterbusch.
Ritterbusch expects them to stay roughly in the $95-per barrel range well into September. World oil demand is rising only slightly, and supplies are adequate. But continued worries over tensions between Iran and the West will keep prices from dropping. Expectations of financial stimulus programs from U.S. and European central banks will also keep the market propped up.
Hurricane Isaac did not have a major effect on crude prices this week, even though almost all of the oil production in the U.S. Gulf of Mexico was halted ahead of the storm. Production is expected to return to normal over the next several days.
Gasoline prices can fall even if oil prices stay relatively high because gasoline demand slows after the summer driving season and refiners can switch to cheaper winter blends of gasoline.
In other Nymex energy futures trading, heating oil rose 5 cents to $3.18 a gallon, while wholesale gasoline climbed 6 cents to $2.97 a gallon. Natural gas rose 5 cents $2.80 per 1,000 cubic feet.