Gas prices high? Oil price survey points to more increases.
Gas prices could be headed higher as oil prices are set to rise, a new survey finds. High gas prices could threaten recovery.
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"A big uncertainty premium is building" in the price of crude oil because of the geo-political uncertainty, Kotok wrote in a weekly commentary. "We remain overweight energy."
But supplies of fuel remained plentiful in most of the country, the survey found.
At $4.24 a gallon, San Diego had the highest average price for regular unleaded gasoline on Feb. 24, while the lowest price was $3.07 a gallon in Denver.
Some believe gasoline prices may average $4.50 a gallon or as high as $5.00, damaging demand ahead of the peak summer driving season.
Blue Phoenix's Licata said record gasoline prices in February are "troubling and could be the precursor for $4.50 plus gasoline this summer." That, he explained, could create another 'Prius Effect' and "delay economic growth, which unlike in 2008 supports more hybrid car/PHEV (plug-in hybrid electric vehicle) demand. However with no real widespread substitute of oil on a mainstream level, I believe near-term the real long idea is to be bullish for WTI versus Brent."
Shelley Goldberg, Director, Global Resources & Commodities Strategy at Roubini Global Economics said "demand destruction is already kicking in as the U.S. is psychologically reluctant to fill up the tank with gasoline nearing $4 a gallon at the pump while the U.K., from a currency standpoint, faces ever rising petrol prices."
Meanwhile, policymakers are issuing warnings about the rise in global oil prices. In its final communique after the two-day meeting of finance ministers and central bankers, the G20 noted risks to growth from rising oil prices, which jumped to a nearly 10-month high above $125 a barrel on Friday. The G20 welcomed pledges by oil producers to ensure adequate supply.