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Supply, demand do not justify costs
In Florida, the average retail price rose 8 cents per gallon during the past week; Georgia's average price increased by 10 cents per gallon; and Tennessee matched the nation's 11-cent increase. The rapid rise in wholesale prices has actually reduced profit margins for retailers. Retail Fuel Watch, an oil industry publication of the Oil Price Information Service (OPIS), reported this week that "so far in 2009, retail margins are averaging 9.65 cents per gallon, but in the past two weeks dipped to 4.9 cents per gallon." At the same time, crude oil, which has increased 38 percent since the beginning of the year, climbed to a May 22 closing price of $61.67 per barrel on the New York Mercantile Exchange (NYMEX), increasing more than $5 per barrel over last week. Some of that momentum is attributed to a decline in the U.S. dollar. "The dollar fell to a fourmonth low against the Euro this past week and, generally speaking, any weakness in the dollar tends to drive investment in commodities, and specifically, crude oil, as a hedge by investors," said Gregg Laskoski, managing director of public relations, AAA Auto Club South. "But, the current supply and demand fundamentals do not justify these gasoline price increases." According to the U.S. Department of Energy weekly report, oil supplies are at the highest level since September 1990, and fuel consumption in the past four weeks is down by 7.6 percent from the previous year. |
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