Crude Nears $80 and Gasoline Rises for Third Week

FILE - this is a Tuesday, June 30, 2009 file photo of a worker operating the valves at the...

FILE - this is a Tuesday, June 30, 2009 file photo of a worker operating the valves at the Al-Shiaaba oil refinery and the pipeline near the southern Iraqi city of Basra, Iraq's second largest city 550 kilometer (340 miles) southeast of Baghdad, Iraq. Oil prices reached a fresh one-year high above US$75 a barrel Thursday, Oct. 15, 2009 boosted by a weaker U.S. dollar and growing investor optimism about an economic recovery. (AP Photo/Nabil Al-Jurani, File)

(AP)

Despite persistently low demand, prices for gasoline have spiked over the past week along with crude oil, threatening one of the very few points of relief for the recession-striken U.S. consumer: Cheap gas.

That may be frustrating for consumers with few signs people are driving more now than during what was a dismal summer for the travel industry. People aren't buying much gasoline.

"I wish it could go down under $2," said Cheryl Couture, 50, who was filling up at a Speedway station in Columbus, Ohio, where a gallon had risen to $2.55.

Couture has watched as gas prices have ticked higher. Prices have risen for three straight weeks, reaching a national average Monday of $2.564 per gallon according to auto club AAA, Wright Express and Oil Price Information Service. The Energy Information Administration put the national average for unleaded regular at $2.574 per gallon.

Rather than rising consumer demand or a tightening of supply, the falling U.S. dollar is most likely to blame.

All one needs to do is look at the price of crude, which crossed $75 for the first time on Wednesday, then neared $80 on Monday.

A cheaper dollar lures more investors into the oil markets because oil is bought and sold with the U.S. currency. Investors, many of whom are betting on a further rally in crude, can buy more oil when the greenback loses value against other currencies. The dollar has continued to fall throughout the month.

And the rising price of crude is exacerbating problems that already existed for the refiners that make and sell gasoline.

People are driving less, trucking companies are shipping less, and airlines are cutting back on jet fuel purchases because businesses travel has ebbed.

That lack of demand has forced refiners to cut back production to levels more common in the aftermath of a hurricane.

And because crude prices are rising, profit margins at refiners who must buy crude to make fuel are shrinking. As a result, they are making even less fuel.