Fed bond plan pumps up gas, fuel oil prices
A customer pumps gas at a ConocoPhillips gas station in San Jose, Calif. (April 28, 2010) Credit: AP
Gasoline and heating oil prices both rose in the past week, as experts had forecast, after the Federal Reserve announced its $600-billion bond purchase program. Gas was up by about 4 cents, but heating oil jumped by almost a dime.
Regular gasoline averaged $3.075 Wednesday in the AAA daily survey of filling stations. That average has risen by 9.7 cents in the past month.
Heating oil jumped by 9.7 cents since last week, to an average of $3.247 Monday in a weekly survey of full-service retailers by the state Energy Research and Development Authority. The new average is 30 cents a gallon higher than a year earlier.
The Fed said last week that it would buy an additional $600 billion in federal government bonds to help push down interest rates. Many oil price analysts predicted last week that reduced rates would likely further encourage investors to switch to higher-yielding commodities, like oil futures, while the weakened dollar would make oil an even better bargain for traders using foreign currencies like euros, since oil is priced worldwide in dollars.
That would push up the price of oil and, therefore, gasoline and heating oil.
Oil, which was trading in the low $80s a week ago, settled Wednesday up $1.09 at $87.81 a barrel on the New York Mercantile Exchange.
Analyst Stephen Schork, editor of the industry newsletter The Schork Report, says crude oil at $90 a barrel would mean gasoline about 15 cents higher at the pumps. Oil at $100 a barrel would translate for Long Islanders into pump prices of about $3.45 or $3.50.
Heating oil on Long Island ranged during the last heating season from an average of $2.698 in the state survey Sept. 28 to $3.158 on Jan. 11 - from full-service dealers. Cash-on-delivery prices usually were lower. Most Long Islanders heat with oil.
The Island's major natural gas supplier, National Grid, has estimated that its customers will pay about 10 percent less this winter than last.
Gasoline hit its driving season peak on Long Island this year on June 1, with regular averaging $3.007 a gallon. It fell to a recent low average of $2.829 a gallon on Sept. 7 before turning upward. The record high average for regular in that survey was $4.346 a gallon, on July 8, 2008.
With Bloomberg News
Gallon of gasoline (average for regular)
Wednesday: $3.075
Week ago: $3.036
Year Ago: $2.877
Source: AAA
Gallon of heating oil (average, full-service dealers)
Monday: $3.247
Previous survey (Nov. 1): $3.15
Year earlier: $2.938
Source: New York State Energy Research and Development Authority
