While crude oil prices have fallen, gasoline prices have moved higher.
Oil fell to the lowest price in six weeks due to reports that U.S. crude stockpiles increased more than estimated. Crude for March delivery on the New York Mercantile Exchange fell as much as 95 cents to $96.66 a barrel, the lowest since Dec. 20, reported Bloomberg News.
Euro zone debt concerns and dismal demand numbers is placing downward pressure on oil prices. Meanwhile geopolitical tension with Iran and signs of economic recovery in the U.S. is placing upward pressure on prices. The net impact has been the price of crude oil prices remaining steady in recent weeks and finally decreasing this week.
Iran has threatened to close the Strait of Hormuz through which 16 million barrels of oil – about a fifth of world’s daily oil trade – passes every day. The Strait of Hormuz is just 45 km wide at its narrowest point, and works as a crucial waterway connecting the Persian Gulf to the Gulf of Oman.
While crude oil prices have fallen, gasoline prices have moved higher. The current average retail price in the U.S. for a gallon of regular self-serve gas is $3.45. Today’s price is 8 cents higher than one week ago, 18 cents higher than one month ago, and 35 cents higher than one year ago, according to the AAA Fuel Gauge Report.
This increase is largely the product of expected refinery shutdowns — both in the U.S. and Europe — as refiners cut production in the face of limited demand for their product. Last week’s DOE report showed refinery utilization decreasing to 82.2 percent from 83.7 percent the week prior.
This week in Beverly Hills and downtown San Diego, CA I’ve seen gas stations where the cheapest gas is over $4.50 a gallon. Gas is already expensive this year in Southern California.