Crude oil prices climbed from $60 a barrel to more than $63 as the first major cold front moved across the country. As usual, weather will be a key determinant for oil and fuel prices this winter,
says the U.S. Energy Information Administration in its weekly report issued this week.
Cold weather increases the demand for heating oil so, at some point, refiners have to produce more. Increased heating oil production puts upward pressure on crude oil prices, ultimately bumping up prices for petroleum products.
But EIA says weather is only one reason for recent price increases. News that some OPEC countries may cut production prompted some buyers to stock up. Moreover, demand – and prices – continue to be affected by concerns about supply disruptions.
A long and colder than normal winter could put a large dent in heating oil supplies, EIA says, but if there is no major supply disruption the price increase for crude oil could be smaller than the one experienced earlier in 2006.
The nationwide average retail diesel price was $2.618 cents per gallon on Dec. 4, up 5.1 cents from the previous week and 19.3 cents from the same time last year. West Coast prices were the highest in the nation, averaging $2.86 per gallon. California prices were up 15 cents for the week and 37.4 cents from a year ago. Prices in other West Coast states were up an average 10 cents per gallon. Prices in other areas of the country: East Coast, $2.61, up approximately 7.3 cents; Midwest $2.58, up 2.4 cents; Gulf Coast, $2.54, up 4.7 cents; Rocky Mountain $2.71, up 2.7 cents.