Posted: Oct 30, 2009 1:15 PM by Associated Press
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 percent 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.
The average retail price for gas was $1.686 a gallon in December. Today's price will tack about $50 a month on to the monthly gas cost for the typical customer compared with then. 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 is worth 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 percent 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.