More gasoline, heating oil price hikes expected

Rising crude oil prices suggest further increases for gasoline and heating oil, experts said Wednesday, even though a new government report showed supplies of both fuels are higher than at this time last year and gasoline supplies rose last week from the week before.

Experts blame the increase in crude oil prices on the continued decline of the dollar against foreign currencies - which tends to make commodities like oil more attractive to investors - and, more recently, a strike by port and refinery workers in France that has forced the nation to import more diesel fuel - which is nearly identical to heating oil - and prevented it from exporting gasoline.

The U.S. imports very little gasoline from France, said Andy Lipow, president of Houston consulting company Lipow Oil Associates Llc. "But," he added, "France is an exporter to other countries and the port disruption has prevented those exports. So, those countries need to seek supplies elsewhere. So those other supplies are not available for export to the U.S."

Regular unleaded gasoline averaged $3.042 a gallon Wednesday on Long Island, according to the AAA, up four cents from a week earlier and up 20 cents from a month earlier.

Heating oil averaged $3.134 a gallon on Monday at full-service dealers on Long Island, according to the state Energy Research and Development Authority. That average has risen by 14.5 cents since the end of August and is almost 26 cents higher than a year earlier.

In New York trading Wednesday, crude futures climbed by what Bloomberg News said was the most in five weeks - $2.28 a barrel, to settle at $81.77 as the dollar fell to what the business news service said was a 15-year low against the yen.

Experts have attributed the dollar's weakness partly to the trillion-dollar-plus U.S. deficit and, more recently, to a belief by investors that the Federal Reserve Board is readying a big purchase of Treasury bonds with newly printed dollars as a way of stimulating economic activity. That would make more dollars available for things like mortgages, car loans and business expansion but would also reduce their value against foreign currencies.

Lipow says gasoline prices probably will continue to drift upward over the next several months but, for the next few weeks, they are likely to remain stable. "Right now, I think we are in a period of leveling off," he said.

Lipow believes heating oil inventories are adequate for the coming winter, which is forecast to be milder than last year in the Northeast, where this nation burns most of its heating oil. Mild weather will exert downward pressure on prices, he says, but, if crude oil prices continue to rise, heating oil is likely to continue drifting upward, he said.