Jane Van Ryan
Posted December 6, 2010
Crude oil prices reached a two-year high on Friday. At the end of the trading day, it closed at $89.19 per barrel, up nearly 21 cents a gallon since November 17.
During the same time period, gasoline prices rose 9.7 cents per gallon to a nationwide average of $2.951, which is the highest level since October 18, 2008. AAA reports that 17 states have retail pump prices above $3.00 a gallon.
As we've noted here, historically gasoline prices have tended to track crude oil. The cost of crude oil is the largest factor in the pump price of gasoline. Several factors also can have an impact, including the value of the dollar (oil is traded in U.S. dollars worldwide) and weather. But the fundamentals of supply and demand play the biggest role. As API statistics show:
- Gasoline supplies are above last year's level and the five-year supply average;
- Gasoline production has been at record or near-record levels this year; and
- Gasoline demand was up 0.6 percent in October.
The demand for oil also is rising worldwide, especially in China. "Supplies are tightening a bit," Jim Ritterbusch of Ritterbusch and Associates told Dow Jones. "We've got demand growth taking place globally, and it's proving a bit higher than previously expected."
ABOUT THE AUTHOR
Jane Van Ryan was formerly senior communications manager and new media advisor at the American Petroleum Institute (API), where she wrote blog posts and produced podcasts and videos. Before coming to API, Jane managed communications for a large science and engineering corporation, and for a top-tier research and engineering university. A few years ago, you might have seen her in your living room when she delivered the news on television. Jane officially retired from API in 2011 and now freelances as an independent communications consultant when not gardening at her farm in Virginia.