At a time when gas prices traditionally retreat, we continue to see the atypical trend of gas prices above $3.00 a gallon for the fourth consecutive week. The national average price of regular grade gasoline was $3.12 Friday, up 2 cents from a week ago. Prices remain 12 cents higher than a month ago, 39 cents above year-ago prices, yet $0.99 below the record of $4.11 set in July 2008. Since November 29, 2010, gas prices have increased 27 cents per gallon (from $2.85), the highest level since October 2008. Crude oil see-sawed slightly above and below the $90 a barrel mark this week. A weak U.S. dollar and demand growth expectations provided a lift early in the week, however, by Friday, crude oil saw a drop, trading near its lowest level in 10 days. The late week drop proved to be a result of increased crude and gasoline inventories (which came as a surprise to investors who had expected significant declines due to last week’s shutdown of the Trans Alaska Pipeline) and speculation of tighter monetary policy in China would restrain demand. By Friday’s close, crude oil settled at $89.21. In its weekly report, the U.S. Energy Information Administration (EIA) announced crude oil stocks rose by 2.6 million barrels to 335.7 million barrels, slightly above expectations, yet less than the American Petroleum Institute’s (API) reported 3.5 million barrel build. Gasoline stocks rose by a much larger than expected 4.4 million barrels to 227.7 million barrels, compared to API’s reported 1.9 million barrel increase. The Weekend “Motorists continue to dig deeper into their wallets when filling up at the pump,” said Tracy Noble, spokesperson for AAA Mid-Atlantic. “Gas prices continue to trend above the $3.00 a gallon mark, due in large part to the recent increases in crude oil prices. Although winter weather has curbed gasoline demand, it has had the opposite effect on heating oil demand, both refined from crude oil. Analysts believe that as long as the coldest winter weather in three decades continues to pound the northern hemisphere, crude oil prices will likely continue their upward trend. Bottom line – no short term relief at the pumps.” The Week Ahead The coldest winter in three decades continues in the northern hemisphere. While snowy conditions have kept drivers off the road—subsequently limiting demand for gasoline—the same cold weather has significantly driven up demand and prices for heating oil. While the demand for gasoline refined from crude oil may be down, increased demand for heating oil as a refined crude product have more than taken up the slack, placing upward pressure on the price of crude itself. Analysts have speculated that it may be difficult for crude prices to ease until these cold temperatures thaw, which doesn’t look to be anytime soon with the coldest temperatures this season set to move into the Mid-Atlantic region this weekend and into next week.

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