Rise is expected in gas prices


Detroit — Motorists like Rennie Gowens saw gas prices fall through much of January and then creep up, and indicators are strong that fuel costs will rise this month.

According to AAA, the U.S. average gas price for regular unleaded on Friday was $2.16 a gallon, compared with $2.32 a month ago. Gas prices have dropped more than 19 cents from a year ago.

But rising per-barrel oil prices and political problems in oil-producing nations such as Iraq, Venezuela and Nigeria continue to pump fear into the price of petroleum. Gas prices are expected to nudge up in the United States this month and next.

Crude oil for March delivery rose $1.72, or 3 percent, to $59.02 a barrel on the New York Mercantile Exchange on Friday, the highest close since Dec. 29. Futures touched $59.10, the highest intraday price since Jan. 3. Prices jumped 6.5 percent this week, the biggest weekly gain since the week ended Dec. 1.

"If we can avoid an escalation of fighting in the Middle East, we're going to have an unusual year in that prices are going to be pretty stable," said Bill O'Grady, assistant director of market analysis for A.G. Edwards & Sons in St. Louis.

He points out that risks such as geopolitical turmoil in the Middle East, an armed conflict with Iran or another strong hurricane season could inject more volatility into prices. But, barring any major supply disruptions, gas prices shouldn't go up much higher than they are now, he said.

"Retail gasoline prices may range between $2 and $2.50," he said. "But probably not much outside of that band on either side."

Nevertheless, increasing fuel costs worry Gowens.

"I put in $23 and it didn't even fill up the tank," said Gowens, a full-time mother who was putting gas into her 1994 Ford Tempo at a station in Detroit. "I still have to drive and do what I have to do, so I guess I'll keep paying."

Like Gowens, other drivers are less optimistic about the near future of gas prices than experts like O'Grady.

"I expect to be paying anywhere from $2.50 and $3 by the summertime," said Reknita Green, a 40-year-old postal worker in Detroit who drives a 2000 Ford Windstar minivan. "I don't see the economy getting any better, and more jobs are being lost."

"It's been an anomalous January in the sense that we had a really mild winter; but it is ominous because prior to 2006 when we had Katrina, we were below $2 in January," said Jim Rink, a spokesman for AAA Michigan in Dearborn. "So now the closer we get to summer, the better chance we have of gas reaching $3 a gallon."

Green says she expects to be in the market for a new vehicle by the summer. Instead of an SUV for her family, Green will probably buy something that gets better gas mileage.

"I can't afford to fill up the tank if gas prices go up like I think they will," she said.

Source : Alejandro Bodipo-Memba