Gasoline is now over $4 per gallon in four states and Washington, D.C. as a three-month surge in pump prices continues.
The nation's capital, Illinois, California, Alaska and Hawaii all had average gas prices above $4 on Wednesday, according to AAA, Wright Express and Oil Price Information Service. Prices in several other states, including Oregon, Connecticut, New York and Washington, are almost there.
Nationwide, gasoline has soared by nearly 54 cents this year to an average of $3.81 per gallon.
Prices are rising as service stations pass along the higher cost of crude. Benchmark oil prices have risen by nearly 8 percent since January. Oil accounts for about three-quarters of the cost of a gallon of regular gasoline, according to the government.
Pump prices also tend to jump this time of year as gasoline suppliers sell off their remaining stocks of winter gasoline to make room for a different grade of gasoline required in the summer. The seasonal switch causes a temporary supply dip that pushes prices even higher.
On Wednesday the government indicated that the switch was under way. Gasoline supplies fell by 1.4 million barrels last week, according to the Energy Information Administration's weekly report.
OPIS petroleum analyst Tom Kloza said gasoline prices may have peaked in California — the state average is $4.36 per gallon — but they're still rising in other states. Kloza predicts that the national average could climb as high as $4.25 per gallon by late April. That would break the record high of $4.11 per gallon set in July 2008.
Oil prices fell slightly Wednesday after the EIA reported that the nation's crude supplies rose last week as expected. Oil dropped further in the afternoon as the dollar rose versus other major currencies. Oil, which is priced in dollars, tends to fall as the dollar rises and makes crude barrels more expensive for investors holding foreign money.
Benchmark West Texas Intermediate crude, which sets the price of much of the oil produced in the U.S., fell by $1.28 to $105.43 per barrel in New York. Brent crude, used to price oil imported by U.S. refineries, fell by $1.25 to finish at $124.97 per barrel in London.
The EIA report also noted that energy demand remains weak in the U.S. Oil demand dropped 5.4 percent last week while wholesale gasoline demand fell by 7.2 percent when compared with a year ago.
Earlier in the day, the International Energy Agency said that global oil supplies fell by 200,000 barrels per day in February, even as members of the Organization of Petroleum Exporting Countries increased production. Government energy experts predict that global supplies will continue to fall. Tighter supplies could push oil and gasoline prices higher.
Saudi Arabia's top oil official said Wednesday that his country and other oil exporters are ready to produce more to offset any supply shortfall, if needed. U.S. energy officials want major oil producers to immediately address the supply shortage, afraid that high prices could put the economic recovery at risk. But the Saudi oil minister said the market for now remains "generally balanced," with what he said is ample production and refining capacity.
In other energy trading, heating oil and gasoline futures both lost less than a penny to end at $3.2618 and $3.347 per gallon, respectively. Natural gas futures fell by 1.5 cents to end at $2.284 per 1,000 cubic feet.
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