Monday, May 16, 2011

gasoline prices news today may 16 2011

gasoline prices news today may 16 2011 - US gasoline prices set to recede after near record : Retail gasoline prices that had been fast approaching record highs should reverse from $4 a gallon this summer in the wake of falling oil costs, but other factors could make the backward trip a bumpy one.

The dramatic drop in crude oil prices that began May 3 will start to manifest itself at local gas stations in the coming days, preventing the average U.S. gasoline price from breeching the psychologically important $4-a-gallon mark this summer, analysts said. High gasoline prices had begun to force consumers to scale back their fuel purchases and spark worries about a derailment of the U.S. economic recovery.

"We should see the change at the pump soon," said Matt Smith, energy analyst at Summit Energy. "We should see prices down at $3.50 a gallon on average."

Prices for regular gasoline reached a U.S. average of $3.982 a gallon May 13, down two-tenths of a cent from the week before, according to the AAA's Daily Fuel Gauge report. After crude oil prices started their three-day fall, which brought them to $99.80 on May 5 from $113.52 on May 2, the daily average gasoline price has made less-than-a-penny gains and losses that have interrupted what had been a steady climb toward the record high of $4.11 set July 17, 2008.

Although the fall in crude prices, if sustained, will eventually bring fuel prices lower, the drop's total effect probably won't make it to the pump for another six weeks, AAA regulatory affairs manager Avery Ash said. That is because worries that flooding along the Mississippi River will hamper fuel deliveries from the 11 refineries near the waterway have caused swings in wholesale gasoline prices despite crude oil costs falling 10% in the past week.

"If the flooding gets a little worse, we could see [wholesale gasoline] prices pop up a little bit more," Ash said.

About 14% of total U.S. refining capacity is located in regions affected by the rising Mississippi River, which in some areas was 15 feet above flood stage Friday, according to the National Weather Service. Refineries in other areas could ramp up their production rates to compensate for any losses in the U.S. Gulf region. The U.S. Energy Information Agency also reported a 1.3 million-barrel increase in U.S. gasoline inventory last week, surprising investors who had been expecting a drop.

Stabilizing prices should benefit not just drivers, but refiners as well. Companies such as Marathon Oil Corp MRO -0.14% , Tesoro Corp, TSO -1.55%, and Delek US Holdings Inc. (DK) said their fuel sales in April had fallen by as much as 4% from the previous month as high prices turned drivers away from the pump.

One more factor complicating matters is the beginning of the U.S. summer driving season, which runs between Memorial Day weekend and Labor Day. As more Americans hit the road, the extra fuel demand could prevent gasoline prices from falling too far, said Marathon spokesman Shane Pochard ( source : http://www.marketwatch.com/story/us-gasoline-prices-set-to-recede-after-near-record-2011-05-16 )

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