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Oil, Gas Prices Rise Ahead of July 4th

Posted on: Thursday, 29 June 2006, 06:00 CDT

By Barbara Hagenbaugh

Oil prices rose for the fifth-consecutive day Wednesday while retail gasoline prices edged higher ahead of the Fourth of July holiday as demand remained strong.

The price of a barrel of crude oil trading for future delivery closed at $72.19, up 27 cents from Tuesday. It was the highest price in nearly three weeks.

The price of oil is important for drivers -- oil costs account for half of the retail gasoline price.

The U.S. average price of a gallon of regular gas was $2.859 Wednesday, up slightly for the fourth-consecutive day, said motor club AAA and the Oil Price Information Service. Prices are up 65 cents from a year ago.

But higher gas prices do not appear to be deterring drivers. The Energy Department in its weekly report said average daily gasoline demand last week was the highest ever for June and the fifth highest for any week on record.

AAA expects more than 40 million Americans to travel 50 or more miles for the Fourth of July, up 1.2% from 2005.

The Westin La Paloma, The Phoenician and Starwood's three other resorts in Arizona, are either sold out or at least 90% full for the holiday, Starwood executive Rick Suhl says. The resorts rely on people driving from California, Colorado and other nearby states

Sarah Spiewak of Annapolis, Md., is driving to Rehoboth Beach, Del., Sunday for a week. The 32-year-old goes for the holiday every year with friends from Cornell University. She never considered canceling because of gas prices. "I wouldn't miss it," she says.

Oil prices rose Wednesday after the Energy Department said U.S. oil inventories fell 3.4 million barrels, or 1%, last week. That was the biggest weekly drop since November. Gasoline inventories declined, 0.5%.

The news came as oil prices were already climbing. Prices have been bolstered by the continued shutdown of a major Louisiana ship channel, which serves area refineries, following an oil spill last week. The government agreed Wednesday to loan oil from the Strategic Petroleum Reserve to two area refineries to help keep gasoline flowing during the summer.

Continued tensions with oil producer Iran and worries about hurricanes have also been keeping prices elevated. Relief is unlikely to come anytime soon, says Briefing.com analyst Kimberly DuBord.

"No matter if it is real or perceived, that uncertainty ... is going to keep prices heightened," she says. "That means from crude all the way to the pump."

Contributing: Barbara De Lollis

(c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc.

Source: USA TODAY

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