U.S. Gas Prices Rev Up for Summer
Summer weather has just begun, yet gasoline has already jumped 5 cents in one week to $3.47 per gallon this week in Berkeley, CA. The U.S. nationwide average hit a record at $3.07 per gallon as temporary shutdowns of refineries and tight supply of the ethanol additive for summer-grade gasoline fanned fears of further falls in U.S. gas inventories. The summer crunch began earlier than expected: last year’s record high at $3.03 per gallon was made later in the season on August 11. Aside from production bottlenecks, inventory growth has also been constrained by lower gas imports due to stronger gas demand outside the U.S..
Gas continues to deliver a fat premium over crude oil even as oil prices rebound from Q1 lows near $50 per barrel – lows made on warmer-than-expected weather. This contrasts from the situation last year when oil led the rise in gas prices. 2006 oil peaked at $80 per barrel whereas 2007 oil prices home in at a much lower level around the $60 mark. Fortunately for motorists, futures counsel a decline in gas prices on expectations of an increase in gas inventories.
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