Gas prices expected to continue rising

Gasoline prices are still going up and are headed higher, according to forecasts, despite conservation by motorists.

A gallon of regular gas averaged $3.898 on Long Island Thursday, the AAA said, up 7.4 cents from a week earlier, 21.1 cents higher than a month earlier and the highest since Sept. 22. Midgrade and premium gasoline averaged more than $4 a gallon.

Heating oil, meanwhile, averaged $4.222 a gallon on Monday at full-service dealers on Long Island, up 3.1 cents from a week earlier, the state Energy Research and Development authority said, about 12.5 percent higher than a year ago.

Sander Cohan, the gasoline specialist at Energy Security Analysis Inc. in Wakefield, Mass., predicts that by June, the local average for regular likely will have reached and maybe surpassed last spring's peak of $4.284 a gallon. "Unfortunately, you are going to see very strong prices for gasoline at the pumps for the next six months or so," he said.

One reason for high gasoline and heating oil prices is rising crude oil prices in reaction to international tensions over Iran's nuclear weapons program, along with improving economies in the United States and elsewhere. The price for U.S. crude oil has risen from about $85 in October to $102.31 Thursday.

While a mild winter has reduced U.S. heating oil demand, bitterly cold weather in Europe has added a premium to prices, as has demand worldwide for diesel fuel -- which is nearly identical to heating oil. Still, analyst John Kilduff, a partner at Again Capital LLC in Manhattan, a hedge fund specializing in energy, thinks heating oil prices are "close to peaking" this season.

Gasoline prices in the Northeast are also being boosted by traders' expectations of tight supplies this spring and summer from the closures late last year of two Philadelphia-area refineries and the anticipated closure of a third in that area. The three account for about half the Northeast's refining capacity, according to the U.S. Energy Department.

For now, though, supplies are ample, said Cohan. Drivers in the mid-Atlantic region used 2.9 percent less gasoline than a year earlier, said MasterCard Inc.'s SpendingPulse unit.