JACKSONVILLE, Fla. -- As crude oil rose to a record close above $98 a barrel this past week in New Yorkafter starting the year at $55 a barrelconsumers and retailers are wondering when and if the trend will reverse itself.
In the meantime, that means tighter margins for gasoline retailers. It's killing us, Jim Smith, president of Florida Petroleum Marketers and Convenience Store Association, told the Jacksonville Daily Record. Ninety-five percent (of gas stations) are owned by independents. This is not big oil. They pay for gasoline and taxes at [image-nocss] the time of delivery, so the cost they face to do business is astronomical.
For the past week, retail gasoline prices have sustained a spike to more than $3 per gallon, the highest point ever for this time of year and about 80 cents more than a year ago, according to the Department of Energy.
If the trend continues, it could force more than three-quarters of Americans to tighten up their budgets by cutting fuel use or by slashing spending elsewhere, according to a Reuters/Zogby poll.
More than 32% of people surveyed said they would drive less if oil prices kept rising, while 20.8% said they would try to conserve energy at home. Another 22.8% said they would cut spending on retail and entertainment.
"The combination of a steady rise in energy prices and the outlook that prices will continue rising has created a sense among Americans that a change in their behavior is right around the corner," John Zogby told Reuters.
U.S. crude oil prices have surged more than 40% since mid-August to near $100 a barrel amid tight stockpile levels in major consumer countries and an influx of speculative investment into commodities markets.
The rally has hit consumers by pulling nationwide average heating oil prices to a record $3.21 a gallon just ahead of winter, and by bringing pump prices to more than $3.00 a gallon for the first time outside the summer driving season.
Energy analysts have said high oil prices could add to U.S. economic turmoil and eventually dent world energy demand growth by slowing industry and discretionary spending.
More than 85% of people in the survey said they held the Organization of the Petroleum Exporting Countries (OPEC) at least partly to blame for the soaring cost of fuel.
About 16% said the cartel, which controls more than a third of the world oil market, was completely responsible. Another 31% said OPEC was mostly responsible, and 38.4% said the group was only partly responsible. Just 6.4% of people surveyed said OPEC was not at all responsible for higher oil prices.
OPEC has shrugged off calls from the United States and other consumer countries for additional oil to cool the red-hot oil market, saying supplies are adequate. The producer group, which said speculators and a falling U.S. dollar are to blame for the rally in oil prices, will next meet Dec. 5 to review output policy.
Meanwhile, the pinch has begun to affect other avenues of trade. The Jacksonville Transportation Authority (JTA) told the Daily Record it is paying 25% more for fuel than it did a year ago. And while ridership numbers haven't been calculated for November, a spokesperson said, Our operators are seeing more people at the regular stops, and hits on our Web site have also increased. We're assuming (high gas prices) will continue to increase ridership for us as more and more people compare the price of gas to the price of riding.
The jump in fuel prices has also raised the cost of shipping. FedEx.com reported the company will raise its air and ground fuel surcharge percentages Dec. 3.
Each FedEx customer pays a percentage of the average cost for a gallon of diesel fuel for ground shipping and a much higher percentage of the average cost for a gallon of jet fuel to send a package by plane.
The ground percentage (5%) is set to increase by a quarter of a percentage point, while the air percentage will increase by one percentage point to 17.5%.
While most reports point to an increase in the price of crude oil as the source of the recent pain at the pump, Smith of the Florida association blamed an under-regulated commodities market.
Congress passed a bill after Enron creating an oversight committee for commodities trading, he told the newspaper. But they never funded it. Because of that, the (Atlanta-based) Intercontinental Exchange is probably responsible for 80 to 120 cents of the increase (of gas prices in the last year) because of their trading practices. They manipulate the price.
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