Gas Reaches Second-Highest Average Price
July 17, 2006 — -- The Department of Energy reported this afternoon that the retail price of gasoline has reached its second-highest level on record. The average price for a gallon of regular unleaded gasoline increased by 2 cents to $2.99 last week, up from $2.97 the previous week.
The only time that measure was higher (since 1990 when the Energy Department started its survey) was immediately after Hurricane Katrina took out about a third of the nation's refining capacity. During the week of Sept. 5, 2005, the retail price reached $3.07.
Today's price level is almost 29 percent higher than the year-ago average price of $2.32.
Gas prices were buoyed by a run-up to record high prices in crude oil last week as continued conflict in the Middle East has ignited a buying spree in the energy markets. On Friday the price of a barrel of crude oil hit its all-time nominal high of $77.03 at the day's close, up 33 cents.
The price of a barrel of oil dropped today from last Friday's record high. The market closed with a barrel of oil costing $75.30, down $1.73. The intraday high was $76.75, also down from last week's record high.
Market experts said today's drop in price mostly came from people selling to make a profit from record highs of last week that came after fighting broke out between Israel and Hezbollah. Traders feared last week that the conflict could spread quickly throughout the Middle East and that Iran could take steps that could threaten oil supplies.
That hasn't happened.
"There is a realization at the moment, it's [the conflict] really not all that directly affecting oil," said Rick Nady at BNP Paribas. "Certainly it could, but as bad as things are, it does not have that much do with the fundamentals."
Translation: The conflict is being priced into a barrel of crude, but it's not directly affecting oil production and exporting. If the crisis widens in the Middle East, however, expect prices to rise quickly again.
Related Stories
ABC News Live