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With crude-oil prices hovering near $100 per barrel, gas prices have some catching up to do.
In fact, you might see a 10- to 15-cent-per-gallon increase at your local gas station over the weekend.
"Prices are going to move higher," says Geoff Sundstrom, a spokesman for AAA.
Here's why: Back in May, when crude-oil prices were around $75 per barrel, the national average price for a gallon of regular unleaded gasoline peaked at $3.227 per gallon, according to the automobile association.
Crude oil surged to more than $98 per barrel earlier this week, before closing at $95.46 Thursday, but the national average gas price is just $3.061 per gallon.
That big of a spike in oil prices -- an increase of more than 25% since May -- is bound to raise gasoline prices. The question is, by how much? And for how long?
How high can it go?
Should we brace ourselves for $4 or $5 per gallon by New Year's? Should we all buy bicycles for Christmas?Luckily, the answer is no.
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Crude-oil prices would need to rise to $120 to $130 per barrel before the national average price for a gallon of gasoline would be likely to reach $4, according to Tom Kloza, the director of editorial content for the Oil Price Information Service.
And the price of crude oil, while important, isn't the only factor affecting gasoline prices, making up just more than half of the cost of gallon of fuel. To reach the $4-per-gallon mark, you'd also need high refining margins -- the difference between what refiners pay for oil and what they are paid for the products they make from it.
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Refining margins tend to be higher in summer and spring, when consumer demand pushes retail gas prices higher, and lower in autumn and winter, when demand ebbs and retail prices tend to fall. (For more on how retail gasoline prices are calculated, check out this primer from the U.S. Energy Information Association.)
The price of a gallon of gasoline typically drops 20 to 50 cents per gallon from summer to fall. Last year, gasoline prices dropped 80 cents per gallon between August and Halloween.
No winter relief at the pump
But this year, the autumn drop-off hasn't happened. In fact, if crude oil remains near the $100-per-barrel mark, we may see the national average gasoline price surpass the summer peak price of $3.227 by Christmas, according to AAA's Sundstrom."Based on crude-oil prices of nearly $100 a barrel, it's feasible we would set a new record high between now and Christmas, at least $3.23," Sundstrom says.
And if oil prices are hovering near the $100-per-barrel mark by next spring, get ready for more record-breaking gasoline prices in time for the peak summer driving season.
"It's very possible that we'll see gasoline cost $3.50 per gallon on a national-average basis," Sundstrom says. "Some places, particularly the West Coast, may get up to $4 per gallon."
Already, drivers are reporting $5 premium near remote Big Sur in California.
This is the first November that the average national price for regular has passed the $3 mark, which means filling up over Thanksgiving will be expensive.
Heating bill could go up, too
Sky-high crude-oil prices are also boosting the cost of home heating oil. So if you use oil to heat your home, get ready for some scary bills.On Nov. 5, the average residential-heating-oil price jumped 15.7 cents from the previous week, reaching $3.11 per gallon, according to the Energy Information Association. That's 72 cents higher than a year ago.
| State | Price | State | Price |
|---|---|---|---|
$3.17 | $3.09 | ||
$2.98 | $3.04 | ||
$2.99 | $3.15 | ||
$2.93 | $3.14 | ||
$3.34 | $2.95 | ||
$3.05 | $2.84 | ||
$3.16 | $3.08 | ||
$3.03 | $3.11 | ||
$2.93 | $3.19 | ||
$3.10 | $3.07 | ||
$3.01 | $3.02 | ||
$3.20 | $3.14 | ||
$3.07 | $3.06 | ||
$3.07 | $2.99 | ||
$3.14 | $2.94 | ||
$3.10 | $3.09 | ||
$3.03 | $2.97 | ||
$3.03 | $2.94 | ||
$2.95 | $3.01 | ||
$2.95 | $2.95 | ||
$2.97 | $3.04 | ||
$3.11 | $3.23 | ||
$3.18 | $3.14 | ||
$3.04 | $3.14 | ||
$2.92 | $2.97 | ||
$2.96 | $3.06 |
Source: AAA Fuel Gauge Report
About 32% of households in the Northeast use heating oil. And these folks can expect to pay a heck of a lot of more to keep their homes warm this winter.
Heating-oil costs in the Northeast are expected to average $1,829 for the winter, up 25% from last year, the Energy Information Association says.
Pizza delivery will be pricier
You'll see the effects of $100 oil in smaller ways, too.Airlines use futures contracts to lock in the price of jet fuel, but they still are feeling the pinch, raising fares in recent weeks in $10 and $20 increments.
Carnival Cruise Lines announced Thursday that it would add $5 a day to guests' bills as a fuel surcharge.
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Already, United Parcel Service maps its routes so that drivers don't waste fuel waiting to make left turns, and you'll see shipping charges rise across the board.
And it'll hurt on NFL Sundays as well. Pizza chain Hungry Howie's is asking customers to pick up their pies or pay a delivery charge of up to $4.
Lucy Lazarony is a freelance writer based in Florida.
Published Nov. 9, 2007
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