Average U.S. gas price hits $4 a gallon for first time As prices soar, AAA urges quick completion of oil trading probe By Michael Kitchen, MarketWatch Last update: 10:05 a.m. EDT June 8, 2008Comments: 45NEW YORK (MarketWatch) -- The average U.S. price for gasoline rose to an all-time high above $4.00 a gallon Sunday, following the spike in crude oil futures seen in the previous week. Regular unleaded gas touched $4.005 per gallon, up from $3.988 Saturday and $3.105 a year ago, according to the American Automobile Association Fuel Gauge Report. The figure represented a national average, with many gas stations having long raised their prices above the $4 level. AAA fuel price analyst Geoff Sundstrom said the recent rise in gas prices has already taken a toll on motorists. "While consumers are very unhappy with the prospect of $4 per gallon gasoline, they are highly adaptive to changing economic circumstances. Many have already responded by changing their driving behavior, adjusting household spending priorities and moving into more energy-efficient vehicles when they can do so," he said. Crude connection The move above the $4 gas mark came after crude oil's benchmark West Texas Intermediate front-month future shot higher Friday by almost $11 a barrel, scoring its biggest one-day gain in dollar terms. The July future closed at $138.54 on the New York Mercantile Exchange. See full story. The jump in oil futures was attributed to a fall in the U.S. dollar and news affecting future supply, such as remarks published Friday by an Israeli official talking about a possible attack on Iran. But Sundstrom said that speculation and trading irregularities on the oil market could also be involved. "What the consumer can not do ... is make certain that oil industry future contracts are traded fairly and appropriately and that prices are not being manipulated in world financial markets," he said. Concern over oil trading issues has prompted the U.S. Senate, the Commodity Future Trading Commission and other government bodies to investigate what has been driving crude futures up so dramatically. Sundstrom said AAA wants the CFTC and other regulators "to quickly complete their inquiry and to be ready to suggest market improvements that might limit the degree to which prices can ever be bid to extremely high levels by those with no intention of ever taking physical delivery of this essential global resource." He also urged gasoline retailers against knee-jerk reactions to sudden price spikes on the crude-oil market. "AAA does ... caution gasoline station owners not to over-react to one day of oil trading by recklessly increasing retail prices this weekend," he said ahead of gasoline's break through the $4 level. "One day of trading does not constitute a market trend, and consumers should not be over-charged for gasoline simply because the oil markets reacted so strongly to [Friday's] news." Headed for $5? Sundstrom said AAA was still assessing how much the jump in oil will impact gas prices this summer. "It would be irresponsible to scare consumers about higher fuel prices when the markets are exhibiting such erratic price patterns, and unlike many market commentators, AAA has no financial interest in 'talking' prices either up or down," he said. However, some watchers on the crude market are forecasting a continued climb in oil futures. Analysts at Morgan Stanley said in a research note last week that they expect to see a short-term spike in oil prices, with shipping patterns suggesting that benchmark crude will reach $150 a barrel by July 4. "Distribution patterns of crude oil out of the Middle East are mimicking those of last year as we exited [the third quarter], when we predicted an oil price spike into year-end based on our projections of sharp inventory draws in the Atlantic basin," they said. "That same pattern is now again upon us, and we are making an identical call, only this time we are starting from a much tighter Atlantic Basin inventory backdrop." Michael Kitchen is a copy editor for MarketWatch and is based in New York.
AZZ Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
