Gas, Diesel Prices Hit New Record Highs!

Submitted by SadInAmerica on Thu, 04/10/2008 - 2:13pm.

 Gas, Diesel Prices Hit New Records a Day After Crude Hits New High Mark

U.S. retail gas prices extended their record run Thursday, adding to the pain consumers feel every time they fill up. Experts predict prices will rise even higher as peak summer driving season approaches.

Meanwhile, crude oil futures fluctuated as investors weighed crude oil's latest records and looked to the dollar for direction.

At the pump, the national average price of a gallon of gas rose 1.4 cents overnight to a record $3.357 a gallon, according to AAA and the Oil Price Information Service. Prices have set a string of records in recent weeks, and are 56 cents higher than a year ago.

Retail diesel, the fuel of trucks, trains and ships, rose overnight to a new national record of $4.045 a gallon.

The Energy Department expects gasoline prices to average as much as $3.60 a gallon this summer, but believes the national average price could spike as high as $4 a gallon at times.

"Gas hitting $3.60, $3.65 a gallon seems like a done deal," said James Cordier, president of Tampa, Fla., trading firms Liberty Trading Group and

Gasoline prices are rising, in part, because of a supply crunch that occurs every spring when refiners switch over from making winter grade gasoline to the less polluting fuel they're required to sell during the summer. Summer grade gasoline is more expensive to make. Also, refiners try to sell off all of their winter grade fuel before the switchover, which drops supplies to very low levels.

This year, the spring price spike is being exacerbated by two unusual factors: tight supplies of key gasoline blending components and record oil prices. Analysts say alkylate, an ingredient critical to the manufacture of summer grade gasoline, is in short supply and will push prices higher.

Meanwhile, crude oil, the main ingredient in gasoline, gyrated Thursday, but remained close to record levels.

Light, sweet crude for May delivery fell 14 cents to $110.73 a barrel on the New York Mercantile Exchange, but alternated between gains and losses. The dollar strengthened against the euro, giving some investors an opportunity to take profits. Crude prices rose to a new trading record of $112.21 on Wednesday after the Energy Department said supplies fell unexpectedly last week.

Many analysts place most of the blame for oil's run above $100 in recent months on the steadily falling dollar. But the effect reverses when the greenback rises, making commodities such as oil a less effective hedge against inflation. Also, oil is more expensive to investors overseas when the dollar strengthens.

However, analysts are reluctant to define a single day's price uncertainty as the end of crude's bull run. Many believe investors will continue plowing money into crude futures on expectations that Federal Reserve rate cuts -- perhaps two more this year -- could weaken the dollar further.

"We could now see a lot of 'system money' join the upside breakout, propelling prices even higher," said Edward Meir, an analyst at MF Global UK Ltd., in a research note, referring to hedge fund investors.

In other Nymex trading Thursday, May gasoline futures rose 1.4 cents to $2.7882 a gallon, while May heating oil futures rose 1.7 cents to $3.2515 a gallon. Heating oil futures are trading near record levels due to falling supplies and strong demand overseas.

Nymex natural gas for May delivery rose 14.8 cents to $10.204 per 1,000 cubic feet. The Energy Department said natural gas supplies fell by 14 billion cubic feet last week, in line with analyst expectations.

In London, May Brent crude rose 11 cents to $108.58 on the ICE Futures Exchange.

John Wilen, AP Business Writer - April 10, 2008 - posted at

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Submitted by SadInAmerica on Thu, 04/10/2008 - 2:13pm.