COLUMBUS, Ohio — After rising nearly every day for the past two months and climbing 67 percent so far this year, it looks like gasoline prices may be ready to take a break.
Gas prices were up for a 54th straight day Sunday, by 0.1 cents, to a new national average of $2.693 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.
The recent run-up exceeds anything that oil analysts say they have seen since the 1970s. But the streak should end Monday or Tuesday, Tom Kloza, publisher and chief oil analyst for OPIS, said Sunday.
The Energy Information Administration reported that gasoline stockpiles grew last week by 3.4 million barrels, or 1.7 percent, much more than the 650,000 barrels that analysts had expected.
The bigger supply has pressured wholesale prices across the country, as demonstrated by a 10-cent drop to $1.93 a gallon Friday on the New York Mercantile Exchange. Prices on the West Coast fell 27 cents last week to $1.931 a gallon and were down 15 cents to $1.94 in the Chicago area that serves the upper Midwest. Those declines eventually will pass through to the consumer.
The question now is whether prices, which usually peak in the U.S. around the July 4th holiday, will backslide into the fall or if geopolitical problems in Iran and Nigeria will drive oil — and gasoline prices — even higher after a short dip.
Typically, prices would decline about 10 percent — 25 or 30 cents a gallon — through the rest of the summer, but Kloza worries that violence associated with the disputed election results in Iran and ongoing pipeline attacks in Nigeria could affect oil production in those countries.
Violence has been escalating in Nigeria as the military intensifies operations to flush out rebels battling for a larger share of that country's oil revenue. On Sunday, militants in Nigeria said they have attacked two pipelines belonging to oil giant Royal Dutch Shell PLC. The extent of the damage was unclear.
And for the past week, protesters loyal to Iranian presidential candidate Mir Hossein Mousavi have been staging massive street rallies, decrying what they believe to be a rigged election, while the government says President Mahmoud Ahmadinejad won the vote by a wide margin. There was no word of new clashes Sunday, but at least 17 people have been killed in the confrontations so far.
Iran produces about 4.2 million barrels of oil per day. It is the second-largest oil producer in the Oil Petroleum Exporting Countries, which pumps 40 percent of the world's oil. Oil revenue accounts for about 80 percent of Iran's government budget.
Pay attention to Iran
Kloza said at this point there is no hint that the violence and demonstrations could threaten Iran's oil industry or exports. But he thinks "everybody needs to pay attention to what happens there the next couple of days."
"If Iran disappeared as a real super hotspot, the market will continue to come off excessive highs," he said.
Last year, tensions like those in Iran could have sent a jolt through energy markets as oil prices raced to $147 a barrel in July and gasoline prices peaked at $4.11 a gallon. But the longest recession since World War II crushed demand for oil, easing worries that global tensions would suddenly send prices higher. Gasoline prices bottomed at $1.61 a gallon on New Year's Eve at the height of the financial meltdown.
However, even though overall demand for energy remains weak, money has poured into oil markets recently as the dollar has fallen against the euro. Investors have used crude as a hedge against inflation, betting that oil prices will likely increase as the economy improves and global supplies start to shrink.
Crude prices have doubled in the last three months, hitting a high for the year of $73.23 a barrel last week before retreating. The rise in crude has pushed gas prices higher, hitting the wallets of consumers, who are now paying about a $1 billion a day for gasoline compared with $600 million at the beginning of the year. That impacts the amount cash-strapped consumers can afford to spend on discretionary items, threatening the nation's economic recovery.
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