Local pump prices see biggest jump since Katrina

Local pump prices in Arkansas jumped 20 cents in the past week, the second highest one week increase since Hurricane Katrina and a penny higher than the national average, according to industry reports.

And prices are expected to continue ratcheting up as unrest in Libya threatens to spread to other countries in North Africa and the Middle East.

The U.S. Energy Information Administration said Wednesday (Mar. 2) that from the beginning of 2011 through February 18 — just before the Libyan crisis began — the spot price of international Brent crude oil increased about $9 per barrel from $93 per barrel to $102 per barrel. Since then, the price of Brent crude oil has increased by a further $10 per barrel.

Meanwhile, the price for the preferred U.S. oil grade — West Texas Intermediate or light, sweet crude — rose above $100 a barrel on the New York Mercantile Exchange on Wednesday for the first time in more than two years. April crude futures settled $2.60 higher on NYMEX at $102.23 barrel.

“Typically, a $10 per barrel change in the spot price of crude oil translates into about a 24 cent per gallon change in the retail price of gasoline within about two months,” the EIA said in its weekly petroleum report. “About half of that price change usually occurs within the first two weeks of the crude oil price change.”

Nationally, the average retail price for regular grade gasoline at the beginning of the week was $3.38 per gallon, an increase of 19 cents per gallon from the previous week, the U.S. Energy Department inter-agency said.

In Arkansas, local pump prices are averaging $3.20 a gallon, up 20 cents from a week ago and 68 cents higher than a year ago, according to AAA’s daily fuel gauge report. Retail diesel prices increased 17 cents to $3.65, nearly about $3.48 a gallon, 88 cents higher than the same period a year ago.

Pump prices in Arkansas’ metropolitan areas range from a low of $3.26 per gallon in the Little Rock area to a high of $3.28 per gallon in Texarkana and the Fayetteville-Springdale-Rogers area. Motorists in Fort Smith and Pine Bluff are paying $3.27 to fill up their tanks.

The EIA said it was the second largest one-week increase since it began tracking weekly retail gasoline price data in 1990. The only week posting a larger one-week increase was in September 2005 when retail prices rose sharply due to Hurricane Katrina.

It is also the highest weekly national average retail price with a February calendar. However, national retail prices are still well below the all-time record of $4.11 per gallon, set on July 7, 2008.

On Wall Street, a top credit ratings service said the ongoing political unrest across the Middle East and North Africa and the threat of further contagion impacting major oil producing states has increased the probability of a significant crude spike scenario
Fitch Ratings service said the impact of higher oil prices could also have a significant impact in the transportation, chemicals and consumer products industries.

“The sectors most vulnerable to a crude spike include airlines and trucking,” Fitch said in a news release. The high cost of jet fuel and the relative fuel inefficiency of moving goods by truck are magnified under higher diesel prices, the Wall Street ratings service said.

In its 10K filing on Feb. 25 with the federal Securities and Exchange Commission, Lowell-based J.B. Hunt Transport Services said it has a fuel surcharge revenue program in place with the majority of its customers — allowing the Arkansas trucking giant to recover the majority of higher fuel costs.

“However, there can be timing differences between a change in our fuel cost and the timing of the fuel surcharges billed to our customers,” J.B. Hunt said in the SEC filing. “In addition, we incur additional costs when fuel price increases cannot be fully recovered due to our engines being idled during cold or warm weather and empty or out-of-route miles that cannot be billed to customers.”

J.B. Hunt also warned it doesn’t have any hedging protecting against rising prices and rapid increases in fuel costs or shortages of fuel could have a “material adverse effect” on the company’s operations or future profitability.

“As of December 31, 2010, we had no derivative financial instruments to reduce our exposure to fuel-price fluctuations,” J.B Hunt said the securities filing.