Gasoline Prices Near Summer Peaks on $95 Crude

U.S. retail gasoline prices have rebounded to summertime levels following the five-week bull run that has lifted crude oil prices to over $96 per barrel, according to retail surveys released this week.

The 17 percent jump in crude prices has pushed U.S. pump prices over $3 per gallon for the first time ever in November.

U.S. retail prices last topped $3 per gallon in July, according to the American Automobile Association.

"We are surprised we didn't hit $3 sooner," said AAA spokesman Geoff Sundstrom. "Prices could go higher now that we are moving into the higher-demand season that coincides with Thanksgiving and the year-end holidays."

The AAA's findings echo the nationwide Lundberg survey of retail prices that showed a rise of 16.3 cents per gallon from Oct. 19 to $2.96 per gallon on Nov. 2.

While lower demand and less stringent fuel specifications mean gasoline is normally cheaper in the winter than in the summer, the current rally could continue as the U.S. heads into the winter heating oil season.

"I could see easily another 15 cents of upward pressure at the pump hitting very soon if crude remains at current levels," industry analyst Trilby Lundberg said on Sunday.

Crude oil prices hit a record $96.24 a barrel on Nov. 1 as worries over winter supplies and massive flows of speculative money fueled a rally from the $81 level seen in early October.

Gasoline futures have so far lagged crude oil, rising only 12 percent over the same period, squeezing profit margins at U.S. refineries and discouraging imports. A fire at Petroplus' Coryton refinery in the United Kingdom has further cut into trans-Atlantic flows.

Adding to Pressures on Consumers

Rising gasoline prices will hit U.S. consumers already facing a declining housing market and a softening economy.

"It's not going to help them out. It's definitely going to slow down consumer spending," said Sam Bullard, an economist at Wachovia in Charlotte, North Carolina.

Continued growth in incomes and strong employment numbers should help mitigate the impact of higher gasoline prices on the consumer in the near term, Bullard said.

However, experts warn gasoline prices this summer are likely to smash the record average price of $3.277 per gallon set on May 24 if crude oil prices remain above $90 per barrel.

"An average of $3.50 would be possible. It wouldn't be out of the question to see $4 in some places, if we stay at $95 to $100 per barrel crude," said AAA's Sundstrom.