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article imageGasoline prices rise for 50th straight day

By Michael Krebs     Jun 18, 2009 in Business
With crude oil prices on the rise - reflecting production crimping and a weaker U.S. dollar - gasoline prices have been on a steady march upward.
The criticism that U.S. President George W. Bush received when gasoline prices climbed above $3 a gallon was everywhere. Some blamed the Iraq war and some pointed fingers at "speculators" in crude oil trading. Still others said that the price increases had to do with the fact that Bush and his colleagues were "oilmen."
But today - under a new president with no ties to oil - we are marking the 50th consecutive day of inflation at the pump. The national average in the United States for a gallon of gas now stands at $2.68, and in California gas prices have crossed the $3 mark.
Fossil fuel prices are rising significantly and the impact on the fragile U.S. economy will likely be felt in the coming months, damping hopes for a turnaround in the second half of the year.
The reasons cited in an Associated Press report for the current increase in gasoline prices were the rise in crude oil prices seen over the past few months and the cut back in production from refiners.
"Refiners slowed production and did a lot of maintenance on the expectation that this was going to be a lousy year for demand," Fred Rozell, retail pricing director at Oil Price Information Service, told AP. "It turns out it wasn't so bad."
But the most recent government report on gasoline demand reflected a 3 percent decrease in gasoline supplied to the market. Meanwhile, a gallon of gas has increased nearly 37 cents in a month.
Crude oil prices climbed above $70 a barrel after key reports detailed lower government reserves. U.S. crude inventories dropped last week by 3.9 million barrels - or 1.1 percent.
Since crude oil prices are pegged to the U.S. dollar, the strength or weakness of the U.S. dollar - and the U.S. economy - gives shape to global oil prices. A weak U.S. dollar causes crude oil to price higher, a factor that has many countries suggesting that crude oil prices be set at a different metric.
With the U.S. economy still quite frail and an ambitious administration in the White House that is printing money and carrying record debts, the expectation on oil prices is that they will continue to climb.
More about Gasoline prices, Crude oil, Economy, Inflation, Refiners
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