Retail gasoline prices chugged higher Friday to a new peak for the year, forcing consumers to dig deeper into already-thin wallets to pay for fuel.
At the same time, natural gas prices also were moving up again and have now climbed 16% in the past two months — just in time for furnace season to kick in.
The worst part: Supplies of oil and gas are plentiful. In fact, storage points for gas are so jammed, producers are running out of places to put it and crude supplies are well above average levels.
Gasoline prices are now up 17 straight days after climbing 0.4 cents overnight to $2.695 a gallon, according to auto club AAA, Wright Express and Oil Price Information Services. That is the highest price since Oct. 26, 2008.
Prices are up 5.9 cents from a week ago and 14.8 cents from a year ago.
Today's price will add about $50 a month to the monthly gas cost for the typical customer, compared with December when the average retail price for gas was $1.686 a gallon. It comes at a time when unemployment is at a 26-year high.
"It's a wet blanket on the consumer. It's something visible you see," said economist Ken Mayland of ClearView Economics.
Oil prices that skyrocketed to $147 a barrel a barrel in July 2008 helped push the economy into recession to begin with, he said.
"Can high oil prices shut down the economy? Well, clearly the answer is yes," he said.
The reason for the increase at the pump is because oil prices have been on the rise, going from $65 a barrel as recently as August to $82 last week. A $17-per-barrel increase tranlates to about 40 cents a gallon.
A year ago, gasoline prices were plummeting as the financial crisis and recession took hold, and demand for oil and gasoline tumbled sharply.
Oil has been moving higher on signs that the economy is improving and a weaker dollar. The Commerce Department said Thursday that the U.S. economy grew at a 3.5% annual pace in the third quarter, the best showing in two years and breaking four straight quarters of declines.
Still, supplies of gasoline, heating oil and diesel fuel also remain well above normal.
Meanwhile, the dollar has fallen to nearly a 14-month low against the euro. Since oil is largely bought and sold in dollars, investors holding stronger currencies can buy more crude for less.
The dollar rose on Friday, and crude fell sharply. There was also a dour consumer spending report.
Benchmark crude for December delivery fell $2.40 to $77.47 a barrel on the New York Mercantile Exchange. The contract rose $2.41 to settle at $79.87 on Thursday and has traded near $80 a barrel all week.
Natural gas fell 7.5 cents to $4.99 per 1,000 cubic feet. Gas had been below $3 per 1,000 cubic feet as recently as last month.
In other Nymex trading, heating oil fell 6 cents to $1.99 a gallon. Gasoline for November delivery fell 7.6 cents to $1.94 a gallon.
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