Gas in Michigan Jumps to $2.40 a Gallon; Oil Declines
By Alejandro Bodipo-Memba, Detroit Free Press
Jan. 10–Michigan gasoline prices have jumped 20 cents in two weeks to an average of $2.40 a gallon, and one expert is suggesting market speculators could be driving up the costs.
“There are a lot of things happening right now, but I’m not sure that a 20-cent jump is wholly justified,” said Jim Rink, a spokesman for AAA Michigan. “I think that speculators driving up the price could be a reason for the spike.”
A survey of 2,800 service stations conducted by AAA Michigan said that the current statewide average is 61 cents higher than it was a year ago.
Metro Detroit’s pump prices rose about 6 cents last week to average $2.36 a gallon.
The national average for retail gasoline is $2.31 a gallon.
Meanwhile, the price of crude oil — the feedstock for gasoline and diesel — dropped in trading Monday.
Crude-oil prices dropped below $64 a barrel as traders took profits from last week’s surging prices.
Light, sweet crude for February delivery on the New York Mercantile Exchange fell 71 cents to settle at $63.50 a barrel Monday.
“The main driver for gasoline prices is crude oil, which has gone up 17 cents,” said John Felmy, chief economist for the American Petroleum Institute, a Washington, D.C., group that represents the oil producing industry. “The margins in the industry have fallen to fairly low levels after being higher earlier in the year. Plus, demand resurged after the hurricanes.”
Hurricanes Katrina and Rita ripped through the gulf coast region in August and September shutting up to 15% of the nation’s energy infrastructure for weeks.
Felmy admitted that refinery output has increased in recent weeks, bolstering fairly robust supplies. As a result, logic would suggest that declining oil prices should contribute to a lowering of gasoline prices.
“Higher gas prices are never a result of any one thing,” Rink said. “The weather has been quite mild, so we shouldn’t be seeing high prices based on that. But I do think we’ve peaked and going into this week, we might see prices moderate.”
—–
Copyright (c) 2006, Detroit Free Press
Distributed by Knight Ridder/Tribune Business News.
For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.