Gas price hikes end after 27 days; oil sinks
NEW YORK (AP) — Gasoline prices have finally dropped after 27 straight days of increases.
The nationwide average for regular unleaded slipped less than a penny to $3.764 per gallon. That ended a streak of price hikes that began on Feb. 8. Pump prices rose by more than 28 cents per gallon in that period, making gasoline the most expensive ever for this time of year.
Also Tuesday, oil fell to its lowest price in about two weeks, while the price of natural gas remained near a 10-year low.
The relief at the pump should be temporary. Experts predict that gasoline prices will rise over the next several weeks. The Oil Price Information Service says the nationwide average could peak at $4.25 per gallon in late April, beating the record high of $4.11 per gallon set in July 2008. That will likely keep gas prices front and center in the presidential campaign and economists will argue their impact on the U.S. economy.
At a White House press conference, President Obama dismissed suggestions by some of his Republican critics that he wants to see gasoline prices rise. No president wants to put more financial strain on American families, especially in an election year, Obama said.
The White House will continue to look for ways to reduce the amount of oil Americans consume, Obama said. The president also asked his attorney general to examine whether speculators were driving up the price of oil.
But "there is no silver bullet" for lowering oil and gas prices, Obama warned.
Meanwhile, the government boosted its estimates for average oil and gasoline prices. The Energy Department said the average price of oil should be nearly $106 per barrel this year while gasoline should cost an average of $3.79 per gallon. Government data show Americans paid an average of $3.53 per gallon in 2011.
Gasoline already exceeds $4 per gallon in California, Alaska and Hawaii, which is tops at $4.37. It's close to $4 in several other states, including Connecticut, Illinois, Michigan, New York, Oregon and Washington.
In response, U.S. drivers are driving less and buying less gasoline. MasterCard SpendingPulse, which uses credit card purchases to estimate gasoline consumption, said average gasoline demand fell last week by 6.3 percent when compared with a year earlier.
The price of gasoline has tracked the increase in its primary component, crude oil. In the first two months of 2012, oil jumped by an average of 13 percent compared with the same period last year.
Pump prices are almost certain to rise further this spring as refineries switch to making summer fuel blends. This annual changeover temporarily cuts into gasoline supplies just before the summer tourism season.
Oil prices fell Tuesday after Iran agreed to let international nuclear inspectors into its facilities. The standoff between Western powers and Iran over that country's nuclear program had driven oil's rise. The announcement eased concerns about a possible disruption to oil supplies around the globe.
Benchmark West Texas Intermediate crude, which is used to price oil produced in the U.S., fell by $2.02 to end the day at $104.70 per barrel, the lowest price since Feb. 21. Brent crude, which prices foreign oil imported by U.S. refineries, gave up $1.82 to finish at $121.98 per barrel.
In other energy trading, natural gas futures were flat at 2.356 per 1,000 cubic feet after nearly hitting a 10-year low on Monday. With winter nearly over and warmer weather expected in coming days, oil traders are betting that demand will fall as homeowners and businesses turn down the heat.
Analyst and trader Stephen Schork said natural gas prices could fall back to the 10-year low of $2.32 per 1,000 cubic feet.
"There's just too much supply out there," Schork said.
That should be good news for homeowners. The Energy Department said residential natural gas prices should fall by nearly 2 percent in 2012.
Heating oil was also flat, at $2.356 per gallon. Gasoline futures lost 2.81 cents to finish at $3.2299 per gallon.