LITTLE ROCK — Arkansas motorists are seeing the digital readouts on gas pumps climb a little higher as the average price of regular gasoline jumped 17 cents per gallon in the past week, mirroring a nationwide jump caused by rising crude oil prices and less refinery production.
Last week, the average price of regular gasoline in Arkansas was $3.18 a gallon, compared with a national average of $3.35, according to the AAA Daily Fuel Gauge Report. On Monday, the state average was $3.35 and nationwide, $3.52.
“It’s happened all over the country,” said Mike Right, a regional spokesman for AAA. “We’ve seen spikes in some places that amounts to double digits overnight.”
The lowest gasoline prices are normally in January when demand is down, but this year January prices rose, Right said.
Last month, the national average price of gasoline was $3.32 a gallon - the second highest average for the month of January, according to a news release by AAA. The highest recorded price for January was $3.37 per gallon in 2012.
A $5 increase in the per barrel cost of crude oil last month pushed gasoline prices up 12 cents at the pump, said James Williams, an energy analyst and owner of the consulting firm WTRG Economics near Russellville.
“Frankly, most of the price [increase] came from mid-January to now,” he said.
Tensions in the Middle East and North Africa caused oil prices to rise as worries about supply interruptions increased, Williams said.
On Monday, those concerns were slightly eased by prospects of renewed talks between the United States and Iran to discuss the Iranians’ nuclear program.
Vice President Joe Biden, while in Germany on Saturday, said the United States is ready for talks with Iran about its nuclear program.The Associated Press reported that the Iranian foreign minister said Sunday he welcomed Biden’s gesture but did not commit to talks
Ongoing concern about Iran’s nuclear program influenced oil prices last year as the United States imposed sanctions to curb the amount of oil flowing out of Iran. Prices also fluctuated when Iran threatened to block oil shipments through the Strait of Hormuz if it was attacked.
In 2011, about 17 million barrels of oil flowed through the strait, according to the Energy Information Administration, which is part of the U.S. Department of Energy.
On Monday, West Texas Intermediate crude, used as a benchmark for U.S. oil markets, dropped $1.60 to close at $96.17 a barrel in the March futures market in New York.
Brent crude, used to establish prices for oil used in many U.S. refineries, fell $1.16 to finish at $115.60 per barrel in London. And following oil, wholesale gasoline for March delivery fell 4 cents to end at $3.01 per gallon on the New York Mercantile Exchange
Retail gasoline prices also rose last month because of a seasonal supply drop from refineries.
During this time of the year, refineries switch from winter-blend fuel to summer blend. As this changeover occurs, companies temporary close refineries to perform maintenance on their machinery, resulting in a downtime that slows output, said Right, the analyst from AAA.
“Typically, we have up and downs this time of the years while things get adjusted,” Right said.
Refinery maintenance season will last until about mid-March.
“By the time we get to March, everyone worries that we won’t have enough gasoline so the price goes back up, and then we have enough gasoline and prices go back down,” Williams said.
The surge in gasoline prices preceded a report from the U.S. Department of Energy on Monday that said consumers spent almost 4 percent of their pre-tax income on gasoline in 2012 - the highest percentage of household income spent on gasoline in almost three decades, excluding 2008, when consumers spent a similar amount.
Gasoline cost the average household about $2,912 last year, according to the report released by the Energy Information Administration.
“If you’re living on a budget right now, it’s a difficult time,” said Phil Flynn, senior energy analyst for PFGBest.
Flynn said it’s going to be hard on consumers this year because the Social Security payroll tax cut expired as part of the fiscal-cliff deal made by Congress at the beginning of the year.
The tax cut, first passed in 2010 to stimulate consumer spending, reduced payroll taxes from 6.2 percent to 4.2 percent for two years. With the tax cut’s end, workers are paying about $340 more in taxes this year, according to the Tax Policy Center.
However, analysts Monday said they expect pump prices to fall in the short term because of lower crude oil prices.
“I think that the price you are paying at the pump is what you’re going to be paying for a while,” said Flynn. “We should get a little bit of a relief, but I’m not sure how long it will stay down.”
Front Section, Pages 1 on 02/05/2013