WASHINGTON -- Oil prices flirted with record highs Monday and continued its rise Tuesday, while gasoline prices fell for a second consecutive week, as oil and gasoline prices continue to move in opposite directions, said a USA Today report yesterday.
September crude climbed as high as $78.10 a barrel Tuesday afternoon, said MarketWatch, reachinga record intraday level for a benchmark contract.
Gasoline prices may decline further in coming weeks as the unusual disconnect between oil and gasoline prices continues, the newspaper [image-nocss] said.
"The public shouldn't correlate these high prices in crude oil to what is going to happen in their local [gas stations],Oil Price Information Service (OPIS) analyst Tom Kloza told USA Today.
The nationwide average price of a gallon of regular gasoline was $2.876 Tuesday, down more than 8 cents from a week earlier and 34 cents below the recent high seen on May 21, the U.S. Department of Energy said. Average prices were under $3 a gallon in 36 states, according to a separate survey from OPIS and motorist club AAA. Prices were lowest in Ohio, where the average was $2.67 a gallon, and highest in Hawaii, where the average was $3.24.
Click here for the most recent Lundberg Survey analysis, as reported in CSP Daily News yesterday.
The declines in gasoline prices have come even though prices for oil, which typically account for about half the retail gas price, have remained elevated.
Strong demand for oil from refineries that are coming back online after being down for maintenance earlier this year is leading to higher prices for oil, Alaron Trading oil analyst Phil Flynn told the paper. Other factors include data out Friday showing a rebound in the economy in the second quarter, which could point to strong demand for energy from businesses added.
"Demand growth is still the key story here," Flynn said.
Peter Beutel, president of Cameron Hanover, an energy consulting firm, said investors seem to continue to be betting on higher oil prices.
"A lot of it is speculation right now," he told the paper.
The higher oil costs are not expected to lead to increased prices at the gasoline pump, according to the report. Kloza said he expects prices to continue to fall in the next week as retail prices catch up with recent declines in wholesale gasoline costs.
Unlike in previous years, when higher oil prices would almost certainly lead to rising gasoline costs, there has been a big disconnect between oil and gasoline prices this year. Earlier this summer, gasoline prices rose near record levels even though oil prices were stable, said USA Today.
The main issue has been refineries, it said. Earlier this year, there were an unusually large number of refineries that were shutting down lines for maintenance, planned or unplanned. That led to increased concern that there would not be enough gasoline this summer. Now, with those same refineries coming back into full swing, supplies are anticipated to be healthy, leading to lower prices at the pump, the report said.
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