Gasoline prices jumped nearly 15 cents in past week
Gasoline prices have jumped almost 15 cents a gallon on Long Island in the past week, pinching drivers' wallets at the height of the summer travel season.
Analysts say motorists can expect more increases in the next two weeks as pump prices catch up with crude oil and wholesale gasoline prices.
The rise stems from an array of factors, including unrest in Egypt that has raised concerns about disruptions of crude oil shipments through the Suez Canal and refinery breakdowns in this country and Canada.
Regular gasoline averaged $3.921 Tuesday morning on the Island, the AAA said, the highest since April 2. The new average is 14.6 cents above a week earlier and 14.5 cents above a year ago, the AAA said.
Crude oil prices began rising two weeks ago when the Egyptian military toppled President Mohammed Morsi. The U.S. benchmark grade has risen from $97.99 a barrel July 3 to $106 Tuesday on the New York Mercantile Exchange. European benchmark Brent crude, the raw ingredient for much of the gasoline consumed on the East Coast, has risen from $105.76 a barrel on July 3 to $109.09 Tuesday in London.
Egypt doesn't produce much oil, but it does control the canal, through which a significant amount of Middle Eastern oil flows in tankers.
Kyle Cooper, director of commodities research at IAF Advisors, a consulting company in Houston, said speculators' fears of disruption are unwarranted; he sees the current run-up in crude oil as a bubble that will burst, possibly within the next two weeks.
"The Egyptian army has demonstrated that it will keep the Suez Canal open," he said.
Unless the bubble bursts soon, John Kilduff, a partner at Again Capital LLC, a Manhattan-based hedge fund, says pump prices are likely to rise higher. "There's still a good 10 to 20 cents to come," he said.
Kilduff said crude prices also are being pushed upward by cuts in output from northern Iraq, Nigeria, Libya, Iran and Russia -- for several reasons, including labor strife, civil unrest, international sanctions in Iran and strong demand in Russia.
The refinery problems, still not completely rectified, experts say, were at units in Oklahoma, eastern Canada, Texas and Pennsylvania.
Egypt's troubles and the refinery issues come midway through the summer driving season, when demand typically soars to its highest level of the year.
Demand this summer has been the strongest in years, said Carl Larry, president of Oil Outlooks and Opinions LLC, a newsletter publisher and consulting company based in Houston. "The economy is finally picking up to where oil and gasoline demand is picking up as well," he said.
Kevin Beyer, president of the Long Island Gasoline Retailers Association, said Tuesday his own station, in Smithtown, also expects further increases. "The way it's going, I don't think prices are going to level off soon," he said. "I'm sure prices will creep up for the rest of this week and into next week."