Gas prices jumped 6 cents overnight, as the recent spike in oil prices begins to hit filling stations across America.
The national average price for a gallon of regular gas rose 5.9 cents to $3.287, motorist group AAA said Friday. That marks the third day in a row that prices have risen, and brings the national average to the highest level since October 2008.
So far this week, gas prices have increased nearly 12 cents a gallon. And analysts expect prices to continue higher in the next few days following a sharp rise in the price of crude oil.
Gas prices were highest in Hawaii, where drivers paid $3.757 a gallon, on average. Wyoming had the lowest gas prices at roughly, $3.014 a gallon.
Tom Kloza, chief oil analyst at the Oil Price Information Service, said the jump in gas prices reported Friday was the largest one-day increase since at least 2008.
"This will definitely be the most expensive February ever," he said, adding that gas prices are typically lower during the winter months.
The jump in pump prices follows a surge in prices for crude oil, the main ingredient in gasoline. Oil prices were holding near $98 a barrel early Friday morning, one day after prices hit a high of $103 a barrel — the highest since October 2008.
Analysts expect prices to continue rising over the next few days, since gas prices typically lag trends in the oil market.
The spike in oil this week could translate to an increase in gas prices of 37 cents per gallon in the coming weeks, according Moody’s Analytics economist Chris Lafakis. He estimates that for every $1 increase in the price of oil, retail gas prices typically rise 2.5 cents a gallon.
Economists warn that an energy price shock could hurt the economic recovery in the United States. In general, every $1 increase in the price of oil costs consumers $1 billion over the course of a year.
That’s concerning because consumer spending makes up the bulk of U.S. gross domestic product, the broadest measure of economic growth.
The government said Friday that GDP was revised lower to an annual growth rate of 2.8% in the three months ending in December. The initial reading had been for a 3.2% growth rate in the period.
Oil prices have been driven higher by political unrest in North Africa and the Middle East, where much of the world’s oil comes from. Despite the surge in prices this week, the amount of oil that has been taken off the world market has been relatively minimal.
EDWARDSVILLE
Bank of England Chief Economist Spencer Dale joined policy makers Andrew Sentance and Martin Weale in voting for an interest-rate increase as a split widened on the dangers of inflation at double the target.
“For three members, the case for removing some monetary stimulus at this meeting was compelling,” according to minutes of the Feb. 10 decision published today in London. “Of those members not favoring a rise in bank rate, some thought that the case for an increase had nevertheless grown in strength.”
Among members pushing for the first interest-rate increase since July 2007, Dale and Weale voted for a 25 basis-point move from the record low of 0.5 percent, while Sentance increased his call to 50 basis points. Adam Posen maintained his vote to add 50 billion pounds ($81.2 billion) to the bank’s 200 billion- pound bond-purchase plan. The other five members voted for no policy changes. The pound rose after the minutes were published.
The Monetary Policy Committee noted the risks of inflation and said “one possibility was that the recent increase in commodity prices, which in many cases had been associated with strong growth in emerging market economies, would continue.”
On the downside, it said that while the “apparent weakness” of the economy in the fourth quarter “could prove temporary,” it could “also be an early signal of a worsening outlook for growth and hence medium-term inflation.”
Rate Bets
The pound rose as much as 0.9 percent against the dollar following the decision and was 0.5 percent stronger at $1.6219 as of 11:09 a.m. in London. Short sterling futures dropped, pushing the implied yield on the December contract up 3 basis points to 1.76 percent.
Higher yields signal investors are adding to bets that the central bank will raise interest rates. Investors are wagering that the bank will increase its benchmark rate to 0.75 percent by its May meeting, 1 percent by September and 1.25 percent by December, according to Sterling Overnight Index Average data from Tullett Prebon Plc.
Dale’s decision marks the first time a career bank official has argued for a change in policy since the bond plan reached its current limit in November 2009. Sentance, who started his drive for higher rates in June, Weale and Posen are among the four “external” members of the panel, who serve part time. The remaining five are “internal” members who are full-time employees at the bank.
‘Mounting Evidence’
“We see these developments as consistent with our expectation for a rate hike in May,” said Philip Rush, an economist at Nomura International Plc in London. “Barring any major shocks between now and then, the MPC is effectively saying that it will be appropriate to start withdrawing stimulus” around the middle of the year.
Sentance voted for a 50 basis-point increase as “there was mounting evidence that firms were able to pass on cost increases to the prices they set, and noted also that nominal domestic demand had been growing for some time at near to the top of its typical range prior to the recession.”
Posen indicated he is growing more concerned about inflation, noting that a “sustained upward trend in global demand prospects, or a shift in sentiment against sterling, could outweigh the domestic forces pushing down on inflation.”
Governor Mervyn King said last week the bank hasn’t preannounced higher rates, and suggested that investors were too quick to raise bets that borrowing costs would increase soon to contain prices. Inflation quickened to 4 percent in January, double the central bank’s target, fueled by a government sales- tax increase, soaring commodity prices and a weaker pound.
In a letter published Feb. 15 to Chancellor of the Exchequer George Osborne explaining the increase in the inflation rate, King said there was a “great deal of uncertainty” about the outlook as he noted “real differences of view” on the panel.
“With its credibility as an inflation fighter increasingly at stake,” the bank may raise rates “by the autumn — or even sooner,” Jean-Michel Six, an economist at Standard & Poor’s in Paris, said in a research note yesterday.
Be careful when buying gift cards on a display rack at a store. They could be a target for fraudsters.
Internet company AOL says its fourth-quarter net income grew despite lower revenue, as the year-ago results were weighed by restructuring costs related to its separation from Time Warner Inc. and other items.
AOL Inc. said Wednesday its net income for the October-December quarter was $66.2 million, or 61 cents per share. This is up from $1.4 million, or a penny per share, in the same quarter a year ago.
AOL says revenue fell 26 percent to $596 million from $806.7 million. AOL says ad revenue dropped partly due to changes it is making to turn its business around, including the selling of unprofitable units.
Analysts polled by FactSet had expected a profit of 52 cents per share and revenue of $589.7 million.
The Treasury Department says it will conduct an auction this week to sell the warrants it received from Boston Private Financial Holdings Inc. The sale is the latest effort by the government to recoup the costs of the $700 billion financial bailout.
Treasury said that the sale of 2.89 million warrants from the Boston-based financial institution will take place on Tuesday with the results announced Wednesday. It set a minimum bid price of $1.40 per warrant.
Purchase of the warrants gives the holder the right to buy Boston Financial common stock at a fixed price faxless pay day loans.
Last week, the government received $312.2 million from the sale of warrants it held in Citigroup, a bank it rescued with $45 billion in support from the Troubled Asset Relief Program during the height of the financial crisis in 2008.
ST. LOUIS
Residents of rural communities in southeastern Australia were sent emergency evacuation orders before dawn Wednesday, urged to leave their homes with three days of supplies just before floodwaters breached levees and swamped the town.
Up to 1,500 homes in the northern Victoria town of Kerang could be affected if the Lodden River rises any further.
The State Emergency Services (SES) said the Kerang levee has been breached in many places and the townspeople should head for a relief center on higher ground.
“You should ensure you have left your property immediately,” the SES said in text message alerts sent about 5:20 a.m. to the town’s 2,500 residents.
“We have enough resources and enough high ground for people to still operate within Kerang, but if it becomes totally inundated there will be very few people left in town,” Mayor Max Fehring told Sky News.
Walls of water miles (kilometers) wide are surging across northern and western Victoria in the wake of record rainfall last week.
Floodwaters have already left 1,000 households in Victoria’s northwest without power, and thousands more homes are under threat of cuts as substations and low-lying power lines are submerged.
Energy supplier Powercor built earthen barriers around the substation in Kerang, in a floodplain expected to be inundated by six feet (two meters) of water.
Across Victoria state, more than 3,500 people have evacuated their homes, with 51 towns and 1,500 properties already affected by rising waters.
The Victorian floods follow weeks of massive flooding in northeastern Queensland which left two-thirds of the giant state underwater and 30 people dead, most of them in a flash flood that hit towns west of the state capital, Brisbane.
The government has said the Queensland floods could be the country’s most expensive natural disaster ever.
The price tag from the relentless floods was already at $5 billion before muddy brown waters swamped Brisbane last week.
ST. LOUIS
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