US petrol prices reached a seventh straight record on Saturday as prices across the country converged on or moved past $US3 a gallon.
According to the US Automobile Association, petrol prices in the US rose 3.4 per cent last week and are up more than 10 per cent so far in May.
The Association said that it’s monitoring of 85,000 service stations across the country showed the average price was just over $US3.15 a gallon, with the range from around $US2.94 in South Carolina to $US3.45 a gallon in California for unleaded petrol.
It’s the third time in as many years that US petrol prices have topped the $US3 a gallon. This year they’ve gone decisively past that mark.
While prices here have kicked up a bit in recent weeks (even though the Australian dollar is much stronger than a year ago) that’s a reaction to the record prices in the Singapore petrol market.
That market is reacting to what is happening in the huge US market where the so-called ‘driving season’ is about to commence with the summer holidays starting next weekend.
But US prices are now well above what they were in August 2006 when world petrol prices spiked higher, while Australian prices are still around 20c a litre under those levels of a year ago, despite the sharp rise in Singapore prices.
What’s driving US prices higher are those supply problems we’ve been writing about for the past few weeks in the US with refineries cutting production of petrol at a time when they should have been churning it out.
Crude oil prices are much lower than they were last August when the price rose to more than $US78 a barrel.
On Friday oil futures finished at $US64.94 in New York, up 3.7 per cent over the week which started with the International Energy Association reporting that a shortage of petrol in the US and other major areas (Europe) could drag oil prices much higher by July.
The IEA pointed out world oil stocks and production inventories were much lower than normal, with US refinery production levels rising but not all full capacity.
Problems including fires, power loss, and longer-than-usual maintenance periods at half a dozen refineries over the past six weeks have cut petrol output.
US retail groups are starting to worry that the high petrol prices, which look like lasting for longer than they did in 2006 and 2005 (after Hurricane Katrina), will start cutting into sales, even though US consumer confidence hasn’t been affected as yet.
US retailers though are a bit punchy at the moment with same store sales in April lower than a year ago and big chains like Wal Mart, Target, Federated, J.C. Penny and Home Depot, reporting lower sales last month.
