Higher gas prices predicted this weekend

Jack Johnson, an employee of Gas+ on Business 54 South in Fulton, pumps gas for a customer at the business, one of the last places in the city that provides that service.

Jack Johnson, an employee of Gas+ on Business 54 South in Fulton, pumps gas for a customer at the business, one of the last places in the city that provides that service. Photo by Don Norfleet.

Gas prices are likely to be going up this weekend in Central Missouri, predicts Patrick DeHaan, a GasBuddy.com senior petroleum analyst.

DeHaan said a refinery fire in Washington state is boosting prices throughout the entire West Coast region and rising spot prices in the Great Lakes area is increasing prices 30 to 45 cents per gallon on Thursday. States affected included Michigan, Indiana, Ohio and Kentucky. He said prices also have been rising fast along the East Coast of the United States.

Gas prices in Fulton the last few days have been ranging from $3.29 to $3.39 a gallon.

Ron Atkinson, owner of Gasper’s Truck Plaza in Kingdom City, watches gas prices closely.

Atkinson said the wholesale price of gasoline changes every day. “It normally takes a few days for the wholesale price to be reflected in retail prices at the pump,” Atkinson said.

“Prices have been going up at a rapid pace this week. Those price increases have not yet, for the most part, been reflected at the pump. So I think it is safe to say that in the near future prices will be going up,” Atkinson said.

“It normally takes from four to five days for the prevailing wholesale prices to be reflected at the pump,” Atkinson said.

“But you never can tell for sure. The market can fall off some and that might not be the case,” Atkinson said.

Another factor affecting pump prices is competition.

If a competing retailer hasn’t increased a price, then a retailer often will keep his prices at a lower level.

This week, for example, Atkinson raised prices at Gasper’s a dime to $3.39 a gallon. But on Thursday competition caused him to lower the price to $3.29 a gallon.

Prices in Fulton Thursday afternoon were $3.39.9 a gallon at most service stations and convenience stores. But at Gas+ on Business 54 South in Fulton the price was $3.38.9 a gallon.

Jack Johnson, an employee of Gas+, said the station normally sells gas at one cent less than the prevailing gas price in the city. “We also are about the only place in town that still will pump your gas for you,” Johnson said.

Atkinson said the price of gasoline is affected by supply and demand.

“But by far the greatest affect on the price of gasoline is the commodity traders on the New York Mercantile Exchange,” Atkinson said.

Atkinson said New York traders react to news stories about potential disruption of oil supplies and will bid up or down gas commodity prices.

“The biggest factor affecting gasoline prices in the United States during the last five years is not supply and demand,” Atkinson said. “It’s also not consumer related. It’s because gasoline and diesel is traded on stock exchanges. Hedge trading on stock markets and commodity trading on the New York Mercantile Exchange are the biggest influences on prices. There are some times when supply has some affect on prices, such as current diesel supplies. But the biggest reason for major changes in gasoline prices is that prices are controlled by trading on the New York Mercantile Exchange. Oil is traded on paper about 30 times more than the average consumption in the United States each day. Excessive trading keeps prices in an uproar every day.”

Atkinson said fears about Iran can be reflected 15 times greater in prices than the actual amount of gasoline involved in any threatened oil supply disruption.

“When the media puts out a story that prices of gas are going up to $5 a gallon or something like that, the traders react immediately and bid up the price,” Atkinson said.

Atkinson said an industry analyst last week predicted higher gas prices from $4 to $5 a gallon. Commodity traders got excited and started bidding up prices.

For the last five days, tensions in the Middle East and fears that Iran is developing nuclear bombs pushed up oil prices every day. The Islamic Republic remained defiant after its discussions with inspectors from the United Nations International Atomic Energy Agency failed.

Earlier, Iran had threatened it might attempt to cut off tanker traffic through the Strait of Hormuz, a 21-mile wide waterway between Iran and United Arab Emirates. It is the only sea passage to the open ocean for oil exporters in the Persian Gulf. About 20 percent of the world’s oil, and about 35 percent of seaborne-traded oil passes through the strait.

But on Thursday, light, sweet crude oil futures prices for April delivery fell below $106 a barrel to $105.88 a barrel on the New York Mercantile Exchange. The price dropped amid growing U.S. crude supplies. But in London oil prices remained higher than in the United States.

Oil prices in the United States are up 7.8 percent during February.

“Wholesale prices change every day several times a day. Fortunately, gas prices at the pump don’t change every day. Some days we win on prices and other days we lose,” Atkinson said.

Gas prices are monitored by volunteer shoppers who post prices on gasbuddy.com.

Prices in Fulton are tracked around the clock through a Gas Buddy link on the Fulton Sun’s homepage at fultonsun.com.

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