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Gas prices rise for 45th straight day

NEW YORK - Gas prices rose Friday for the 45th consecutive day as summer travelers hit the highways and refineries hold back on fuel production.

Pump prices added less than a penny overnight to a new national average of $2.639 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

Crude prices are surging as well, but not as consistently as gasoline.

Benchmark crude for July delivery fell 64 cents to settle at $72.04 on the New York Mercantile Exchange, the first time oil prices have fallen in several days.

Gas is 37.2 cents a gallon more expensive than last month. Yet prices have risen all year after slumping to around $1.60 in December.

Retail gas typically rises with demand during the summer driving season. But this year those dynamics have changed somewhat. The government expects motorists to drive billions fewer miles as an expanding population of unemployed workers stays home.

That is also why refiners are cutting back. Even though prices are rising, demand for fuel remains very weak compared with previous years. Gas prices are still $1.421 a gallon cheaper than last year at this time.

That may be no consolation to consumers trying to make their dollars go further during this recession, but refiners say if they were to produce as much gasoline as in year's past, they'd go out of business.

Government figures show refiners operated at 85.9 percent capacity last week, which is very low for this time of year, the second week of the driving season.

Oil producing countries are also pulling back, part of the reason that crude hit new eight-month highs this week, peaking Thursday at $73.23 a barrel.

Oil prices have more than doubled since March even though demand is down for the year and American storage tanks are bloated with a huge surplus.

And then there is the money flooding in from Wall Street. Investors fleeing the falling U.S. currency have parked a lot of money in commodity markets. Because crude is priced in dollars, it also gets cheaper for investors overseas.

How long dollar-driven oil prices can remain at these levels is not known, with demand at current levels.

On Friday, the Organization of Petroleum Exporting Countries dropped its daily demand forecast by 230,000 barrels, estimating that global consumption would shrink to 83.8 million barrels a day.