Record U.S. fuel prices could worsen by spring

Retail gasoline prices dropped by the smallest of margins nationally over the last week, but California’s are still climbing. The state and U.S. averages are far above the records for January fuel prices that were set just last year.

In California, the average cost of a gallon of regular gasoline today is $3.714, up 0.9 cents since the previous Monday, according to the AAA Fuel Gauge Report. That was also 35 cents a gallon higher than the state’s old record for this date, set in 2011.

Nationally, the average price today is $3.383 a gallon, down just 0.4 cents since last Monday and 27 cents a gallon higher than the record set last year. The AAA uses fuel price data collected by the Oil Price Information Service, using credit card receipts from more than 100,000 services stations around the country.

Relief from the record prices may be a long way off. U.S. refineries have begun the new year with a new record for fuel sales overseas, according to the U.S. Energy Department. Exports of refined fuels so far in 2012 are running at about 2,921,000 barrels a day. That’s an increase of more than 30% over last January and a jump of more than 50% since 2010.

U.S. refineries, unable to make much of a profit in the U.S. because of low demand, have found more lucrative deals overseas. They have also been mothballing domestic refineries, enough so that the Energy Department is warning that gasoline supplies in the U.S. may be squeezed further this spring as demand increases.

The Energy Department said that “the recent idling of two refineries in southeastern Pennsylvania and previously announced plans to idle an additional refinery in the region by mid-2012 would, taken together, reduce operating refinery capacity along the entire East Coast by 27 percent.”

The Energy Department added, “U.S. exports of gasoline have increased significantly over the past few years as U.S. refineries have taken advantage of those growing markets. Any demand pull from the East Coast will serve to tighten markets” even more.

That’s the kind of scenario that can lead to more pain at the pump this spring, said oil analyst Phil Flynn of PFGBest Research in Chicago.

Flynn said “whenever you reduce refinery capacity, you have the increased possibility of price spikes because you have fewer resources to fall back on in the event of a refinery disruption or an emergency.”

In other energy news, oil prices in the U.S. continued to hover in the $100 a barrel vicinity amid continuing Middle East tensions between Iran, and the U.S. and Europe. The European Union said that it would stop importing Iranian oil in July, and Iran again threatened to close the strategic Strait of Hormuz.

Oil shipments by supertanker through the narrow Strait between Iran and the United Arab Emirates account for roughly one third of all seaborne crude transport and 20% of all oil traded worldwide, the Energy Department said.

Crude prices on the New York Mercantile Exchange rose $1.67 to $100 a barrel. European crude traded for $111.11 a barrel in London, up $1.25.

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