Until Monday, pump price expert Fred Rozell figured that California gasoline was headed down to $2.85 a gallon or lower. But that was before crude oil futures rose $1.08, or 1.3%, to settle at $79.61 -- their highest close in more than a year.
Now Rozell says all bets are off in spite of several fundamentals, such as the facts that oil supplies are plentiful, demand remains weak and refiners have slashed production because motorists aren't driving enough to allow gasoline makers much of a profit.
"You would think that this would drive the price of crude down, but what we have here is more of a financial play than market fundamentals. There is no reason for oil to be this high," said Rozell, retail pricing director of Oil Price Information Service in New Jersey. He added that the 10-week price slide that finally drove California gasoline back below $3 a gallon was probably over.
"If crude prices keep moving forward, the decline is going to stop," Rozell said.
Over the last week, the average price of a gallon of regular gasoline in California fell 2.7 cents to $2.998, the Energy Department said. California's average hadn't been below $3 a gallon since Aug. 3. Nationally, retail prices are already on the rise. The U.S. average jumped by its highest amount since Aug. 10, climbing 8.5 cents to $2.574 a gallon.