Oil near a new high for the year, gas edges up

Retail gas prices rose slightly last week, the first time that’s happened in two months, according to government figures released Tuesday, as refiners shut down operations to account for very weak demand.

Nationwide, gasoline prices rose about 2 cents to $2.489 per gallon, according to the Energy Information Administration.

Prices rose especially quickly in the Midwest but the cost for gasoline was already so low, the jump of 8 cents still puts an average gallon of gas at $2.44. That’s 55 cents cheaper than last year in the Midwest, when gasoline was in a free fall because of the economic crises.

Gas prices in California and along the West Coast can distort the national picture. In every other region, the average gallon of gas cost less than $2.50.

Consumers may want to begin weighing what they loath more, colder weather or higher gas prices. Old Man Winter may have a say in how much you pay at the pump over the next few months.

Refiners are taking facilities off line, making less fuel and other products because so little is being used. That may change if a winter blast sends demand for heating oil and other fuels higher.

If refiners are making more heating oil, they’ll be making more gasoline, which would likely keep the country well supplied and prices comfortably low.

Either way, few expect a spike in prices this winter or even next spring, when people start taking to the road again in large numbers.

“If it gets cold early, it could mean that we’re going to have some healthy refinery runs so if you’re not happy with gas prices, even around $2.50 per gallon, you may want to root for some cooler temperatures,” said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

Crude prices, however, are another story.

A barrel of oil neared new highs for the year Tuesday as the dollar slipped against other major currencies, demonstrating how much the weakened U.S. currency can affect consumers across the world.

Prices have risen four straight days even though most energy experts believe that the U.S. government will report again this week that more unused gasoline and oil is heading into storage.

Rather than supply, the direction of oil is being dictated by the dollar.

The U.S. dollar index, where the U.S. currency is measured against other major currencies, hit a 14-month low Tuesday. Because crude is bought and sold in dollars, it essentially becomes cheaper for international investors who have flooded into energy markets.

Benchmark crude for November delivery gained 88 cents to settle at $74.15 on the New York Mercantile Exchange. At one point, prices reached $74.47, just short of the $75 reached on Aug. 25, when the driving season was still in full swing.

Natural gas has seen the same huge build up as factories shut down and major energy users cut back. Unlike crude, however natural gas is not bought and sold only in dollars. Natural gas prices tumbled 29.2 cents, nearly 6 percent, to settle at $4.588 per 1,000 cubic feet on Nymex.

Consumers are helping push gasoline prices lower because they’re driving a lot less.

On Tuesday, a SpendingPulse report by MasterCard showed that American motorists consumed 2.4 percent less gas during the week ended Friday.

Those numbers could be affected by the holiday weekend, however.

MasterCard’s report is based on aggregate sales activity in the MasterCard payments network, coupled with estimates for all other payment forms, including cash and check.

Retail prices fell again overnight, according to auto club AAA.

If crude breaks above $75 Wednesday, however, that might also drag gasoline prices higher, Kloza warned.

“That $75 level is a bit like a jailbreak,” Kloza said. “If we break through that, prices could run and that could pull gas and prices for other refined products higher.”

In other Nymex trading, heating oil rose almost 3 cents to settle at $1.9234 a gallon, and gasoline for November delivery gained about 3.3 cents to settle at $1.8318 a gallon.

In London, Brent crude rose $1.04 to settle at $72.40 on the ICE Futures exchange.

Associated Press Writers Alex Kennedy in Singapore, Pablo Gorondi in Budapest, Hungary contributed to this report.