Retail gasoline broke all of the usual seasonal patterns in 2007, and the last week was no exception, Energy Department figures showed Monday as pump prices rose nationally and in California at a time of year when prices are normally on the decline.
The year that motorists will be only too happy to see in their rearview mirrors ended with the national average at $3.053 for a gallon of self-serve regular, up 7.3 cents from a week earlier, according to the Energy Department's weekly survey of filling stations. A year earlier, the average was 72 cents lower. Californians on average paid $3.298 a gallon, which was 3.7 cents more than last week and 69 cents more than they were charged a year earlier. The new year could be even more expensive at the pump as oil prices hold above $95 a barrel. On the New York Mercantile Exchange, crude oil futures for February delivery fell 2 cents to $95.98 a barrel Monday, ending the year up nearly $35, or 60%, after trading as high as $99.29 on Nov. 21.
The latest commitment reports from traders to the Commodity Futures Trading Commission show "the most bullish year-end sentiment ever" that energy prices will rise in coming weeks, a traditionally low-demand period, said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.
"We are continuing to march higher and whether we are talking about sleepy investment houses or cowboy market traders, the betting is on a substantial price appreciation for gasoline in the spring," Kloza said. "The most conservative say 10 to 20 cents and some think it could be as high as a dollar."
The year was marked by an 87.5-cent climb in the national average gasoline price to $3.209 a gallon from Jan. 1 to the Memorial Day weekend, the traditional start of the summer driving season.
Along the way, Californians paid a record $3.461 a gallon May 7 and the U.S. average set a record of $3.218 a gallon May 21.
Blame was laid on an unusual number of refinery outages and strong demand. By Labor Day, usually the biggest driving weekend of the year, the U.S. average had dropped to $2.796 a gallon before prices began their unusual late-year climb.
Demand has remained higher than normal across the U.S. throughout the year, except in California. Judy Chu, vice chairwoman of the state Board of Equalization, released third-quarter figures Monday that showed the sixth consecutive quarterly decline in gasoline consumption in the state. In the third quarter of 2007, Californians used 3.98 billion gallons of gasoline, 46.2 million gallons less than they did in the same period in 2006.
But not everyone was bullish in predicting record high gasoline and oil prices in 2008.
David Beavers, a commodities broker at Alaron Trading Corp. in Chicago, said he expected that a slowing U.S. economy and continuing fallout from the sub-prime mortgage meltdown would lead to reduced demand for oil, which would pull down gasoline prices.
"We think oil will trade at around $92 a barrel for the next three weeks, but drop to $58 to $65 by the end of the year," Beavers said. "We expect demand for gasoline to come down over the next six to eight months and prices around $2.70 a gallon nationally. We are a lot more bearish than most of the people out there."
At least one analyst said the low value of the dollar was one factor in why oil producers were unlikely to raise production any time soon. Oil is traded in U.S. dollars.
"You cannot just expect oil producers to increase production when we keep giving them currency that isn't worth as much," said Fadel Gheit, senior energy analyst for Oppenheimer & Co. "If they increase production, they will be digging a hole under their own feet."