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Saturday, February 23, 2008 - Page updated at 12:00 AM

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Gas prices soaring as crude oil tops $101

The Associated Press

NEW YORK — Gas prices jumped Friday to their highest level since June, a possible preview of what many analysts believe will be a record spike in pump prices this spring.

But the current surge could be short-lived. While prices have risen sharply in recent days in response to oil hitting a record above $101 a barrel, gasoline supplies have quietly grown to their highest level in 14 years.

"We've got a major supply cushion," said Jim Ritterbusch, president of energy consultancy Ritterbusch & Associates in Galena, Ill.

At the pump, gas prices rose 2.9 cents overnight to a national average of $3.115 a gallon, according to AAA and the Oil Price Information Service. That was the highest since June 8.

The average price for regular gas in the Seattle-Bellevue-Everett area was $3.282.

At the same time, March gasoline futures fell 0.86 cent to $2.513 a gallon on the New York Mercantile Exchange on the view that supplies are growing while demand is weakening.

Oil futures fluctuated as some traders sold in response to growing supplies and others bought on concerns about potential supply disruptions.

Meanwhile, light, sweet crude for April delivery rose 49 cents to $98.72 a barrel but alternated between gains and losses.

Many analysts think gas prices will rise this spring to new highs near $3.75 or $4 a gallon. But not everyone agrees.

Ritterbusch thinks the high level of supplies and an eventual decline in oil prices will pull pump prices down. He doubts prices will rise as high as $3.75 without a major overseas supply disruption or domestic refinery outage.

Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J., argues that while gasoline prices won't rise as much this spring as in previous years, they are starting from a much higher level.

Prices are 83 cents higher than a year ago. That means retail prices could peak between $3.50 and $3.75 a gallon, Kloza said, well above May's record of $3.227 a gallon.

The Energy Department's latest forecast calls for gas prices to peak near $3.40 a gallon this spring.

Of course, gasoline prices also respond to oil prices. Oil has traded in a band between about $86 and $100 a barrel for months, a trend many analysts expect to continue throughout the year.

That will likely keep gas prices oscillating in their own narrow band around $3 a gallon for most of the year.

Copyright © 2008 The Seattle Times Company

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