Colorado gasoline prices rose north of $3 for the first time since 2008 as speculation mounts that global supplies of crude oil could be disrupted.
Analysts said recent increases in gas and oil prices are a classic case of speculation with no foundation in the fundamentals of supply and demand.
Almost no oil production has been lost from political unrest in the Mideast, yet crude prices soared Monday on fears that violent protests in Libya could disrupt supplies.
“It’s not clear that there will be any disruptions in oil supplies, but it’s very clear that traders are worried about disruptions in supplies,” said oil analyst Mike Lynch, president of Strategic Energy and Economic Research in Winchester, Mass.
Colorado’s average price for regular gasoline Monday was $3.04 a gallon, the highest since October 2008, when gas last touched $3, according to the American Automobile Association.
Still, it’s far short of the record high average price in Colorado of $4.09 in July 2008.
Some analysts expect prices to continue a modest rise through the summer driving season, perhaps to $3.50 or $3.75, then go back down — barring crude-oil production losses in the Mideast.
“We’ll probably see higher prices in the next few months, but there’s a good chance we’ll come back down to around $3 later in the summer,” Lynch said. “But all bets are off if we see a long-term supply disruption in Libya or if people start throwing bombs in Saudi Arabia.”
A sampling of consumers Monday showed concern about rising gas prices, yet not enough to substantially change consumption patterns.
“I don’t like it much, but I gotta drive,” said Marcus Sullivan of Denver, filling up Monday at a Diamond Shamrock on Broadway where the price of regular was $2.999 a gallon.
“I’m just hoping it doesn’t go up much more,” he said. “I can’t really cut back. I need my car.”
Among the 10 Colorado cities surveyed by AAA, the most expensive gasoline Monday was in Vail, at $3.40. The cheapest was in Denver, at $2.996.
One month ago, Denver’s average price was $2.90. In February 2010, the average was $2.49.
In London on Monday, speculative fears drove the benchmark price of crude oil to $108 a barrel, up $5.48. U.S. floor trading was closed for the Presidents Day holiday, but in electronic trading on the New York Mercantile Exchange, U.S. oil prices also jumped, rising $5.22 to $91.42.
Domestic prices are running lower than in Europe because the U.S. is less dependent on Mideast oil. The largest sources of imports for the U.S. are Canada and Mexico.
Monday’s price for U.S. oil is near a two-year high, even though domestic oil supplies are ample.
“There’s no real justification for us to be seeing these higher prices,” said Mark Larson, executive director of the Colorado-Wyoming Petroleum Marketers Association. “It’s hard to understand why we’re at this level when we have the highest stocks of gasoline on record and a glut of crude.”
Larson said one reason gasoline prices have been modestly but steadily rising in recent months is that U.S. oil refineries are increasing their profit margins after a long period of low margins.
Steve Raabe: 303-954-1948 or sraabe@denverpost.com
