Gas prices in Utah have fallen in recent days, but they remained the third-highest in the nation Thursday, while global oil prices increased.
At $4.01 for a gallon of regular unleaded gasoline, Utah's average price was 31 cents higher than the national average of $3.70 per gallon. Only Alaska, at $4.55 per gallon, and Hawaii, at $4.43, were higher. Except for Utah, no state in the continental United States had an average price more than $4 a gallon.
Even so, Utah's average prices for regular unleaded have fallen after reaching a record high of $4.22 per gallon on July 18.
Lee Peacock of the Utah Petroleum Association, a trade group for the industry, doesn't know when Utah prices will align with the national average. But he's confident they will.
"The trend is clearly downward," Peacock said. "Our market has responded a little bit slower (to national trends). We were also slower to go up when everyone else went up."
Peacock believes Utah's geographical isolation may play into its outlier status. "Our modes of transportation and distribution are a little bit different from the rest of the country," he said. "We get our crude supplies from local and Canadian sources, either by pipeline or truck."
Utah doesn't have proximity to major refining seaports, and Utah refineries "are relatively small" in comparison to Gulf of Mexico or West Coast refineries, Peacock said. "We don't enjoy the same economies of scale."
AAA Utah spokeswoman Rolayne Fairclough said that Utah also doesn't have as much retail competition as other parts of the nation. "We don't have B.P., Shell, Shamrock," she said. "You go to places, you see stations we just don't have here."
Meanwhile, oil prices shot up more than $5 a barrel Thursday, rising to the highest level in over two weeks as escalating tensions with Russia stoked fears of supply disruptions to the West.
Crude's rally mimicked the wild price swings seen last month and at least temporarily halted oil's slide back toward $100 a barrel. A weaker U.S. dollar and worries about tightening output from OPEC countries are also supporting prices.
After days of brushing off geopolitical flare-ups and a tropical
storm, oil spiked above $122 a barrel as traders became rattled over increasingly hostile Russian rhetoric toward a U.S.-Poland deal to install a missile defense system in Eastern Europe a move Moscow views as a threat.
The continued presence of Russian troops in Georgia a key conduit for Western-bound oil shipments injected even more bullish sentiment into a market that had appeared to be losing momentum on the idea that high energy prices were curbing demand.
Oil watchers said the market's sudden reaction to the standoff reflects a growing acknowledgment of Russia's bearlike influence over world energy supplies.
"People are finally realizing that this Russian situation has the potential to be bad for a very long time," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn. "The Russians have shown evidence that they're willing to cut off energy supplies to advance their aims. There is concern that they are now going to be much more assertive in that area."
Russia is the world's second largest oil exporter after Saudi Arabia. It supplies a quarter of the European Union's oil and half of its natural gas. If those shipments were cut off, EU countries would be forced to seek supplies elsewhere at a time when spare crude capacity is already stretched to an extremely thin margin of about 2 million barrels per day, analysts say.
Light, sweet crude for October delivery jumped $5.62 to settle at $121.18 a barrel on the New York Mercantile Exchange after earlier rising as high as $122.04, crude's highest trading level since Aug. 4. Crude prices have settled higher for three straight sessions. In after-market trading, prices rose $6.17 to $121.72 a barrel.
The price jump came as retail gas prices continued to fall, shedding more than a penny overnight to a new national average of $3.702, according to auto club AAA, the Oil Price Information Service and Wright Express. Prices have now fallen 10 percent from record highs above $4 a gallon set July 17, but the pace of the drop off could slow if oil holds onto Thursday's gains."This is probably about it in terms of a retail gas drop. We may be a few cents away from the August bottom," said Tom Kloza, publisher and chief analyst at the Oil Price Information Service in Wall, N.J.