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Expert: $4 per gallon average possible
NEW YORK — Oil prices rose Wednesday after the government said U.S. gasoline demand continues to rise despite sharp price increase at the pump.
The Energy Information Administration report suggests American motorists are so far handling higher fuel costs without cutting back. At a national average of $3.548 per gallon, retail gasoline prices remain at the highest ever for this time of year and have reached a point where economists expect consumers to start to cut spending.
The EIA said the U.S. consumed an average of 9.1 million barrels per day of gasoline, up 1.2 percent from the same period last year. Gasoline supplies also dropped last week by 5.3 million barrels, more than twice as much as expected.
Benchmark West Texas Intermediate crude for May delivery added 59 cents at $105.56 per barrel on the New York Mercantile Exchange in midday trading.
Oil prices have jumped about 24 percent since the middle of February when fighting broke out in Libya and threatened the country’s oil fields.
The rebellion in Libya, combined with other protests in North Africa and the Middle East, has raised concerns that oil supplies will tighten as violence spreads. Prices jumped again Wednesday morning after a bomb went off at a crowded bus stop in central Jerusalem.
Gasoline has followed oil higher this year, jumping 37.7 cents per gallon just in the past month, according to AAA, Wright Express and Oil Price Information Service. The increase has forced Americans to pay roughly $142.5 million more per day to fill up.
“It’s very possible we’ll see a national average of $4 per gallon this year,” PFGBest analyst Phil Flynn said. “But $5 gas is possible if we keep seeing more disruptions in the Middle East.”