Historically, the price of
fuel rises and falls with the cost of crude oil – and that’s just one reason the average U.S.
retail price of diesel fuel spiked to $1.551 from the previous average of $1.503,
as reported Jan. 12 by the U.S. Department of Energy.
The February contract for crude oil futures closed Jan. 13
on the New York Mercantile Exchange at $34.43 per barrel, 6.7 percent higher
than a year ago. In fact, prices climbed above $35
per barrel briefly Jan. 13, the highest price since last March just before the
Iraqi War, before settling back.
According to press accounts, OPEC made a conscious decision
to let the price go above $30 a barrel to offset the weakness of the dollar. OPEC ministers have said the sliding
dollar, the currency used in oil trading, means that producers need higher
prices to protect their purchasing power. OPEC will meet in Algiers, Algeria,
Feb. 10 and will most likely decide to leave output unchanged, reports said.
The unpredictability of Mother Nature also played a role in
rising fuel prices.
Heavy demand for heating oil used in the frozen Northeast
also drove diesel prices higher. The highest average prices in the nation
were in the New England area, where the average price is currently $1.713 per
gallon. That topped the average California price of $1.680 per gallon, where
prices from week-to-week are typically the highest in the nation.
The bad news – cold weather in the Northeast is expected to
drive U.S. inventories of fuel oil down to 28-year lows. Stockpiles of fuel oil
dropped by 1.7 million barrels during the New Year's week to 269 million
barrels, the lowest inventory since 1975, according to a U.S. Department of
Northeast is expecting below average temperatures the next two weeks. The
region consumes 75 percent of all fuel oil.