GAS PRICES RISE DESPITE OIL BOOM -...

6B ❚ SUNDAY, FEBRUARY 11, 2018 ❚ USA TODAY - E1

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of workers say the top

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From Texas to the Dakotas, oil outputhas surged, ranking America once againamong the world’s top energy pro-ducers. But the boom hasn’t stopped ris-ing gasoline prices.

Unleaded regular had pushed over$2.60 per gallon nationwide by mid-week, up from $2.26 a gallon a year ago,reports AAA’s daily price survey.

Analysts expect gas prices couldclimb another 10 cents by early spring, again of almost half a dollar in a year.

For the typical driver putting 250miles per week on a V-6-powered FordF-150 pickup truck, the nation’s top-selling vehicle, gasoline for the dailycommute to work will cost about $39 perweek, up from about $31 last spring.

It’s the new normal at the pump.It’s happening across the country,

and few experts think it could fade awaysoon. Instead, energy-fed in�ationcould weigh on Washington policymak-ers later this year when they mull pos-sible interest-rate increases.

Higher gasoline prices trace in part tothe new surge in U.S. gasoline exports.Tankers crossing the Gulf of Mexico areunloading gasoline in South Americanports following Venezuela’s oil sectorcollapse and the inability of Mexican re-�ners to make full use of their own pro-duction capacity.

“We’ve got plenty of crude oil in theUnited States. Production is blastingthrough all kinds of records,” said TomKloza, head of global energy analysis atmarket researcher Oil Price InformationService. “We’ve become perhaps theworld’s biggest exporter of gasoline.”

At the same time, oil output by SaudiArabia has �nally eased. This has tickedup oil prices worldwide, attracting spec-ulators and investors back into the com-modity futures market to bet on risingenergy prices. Kloza estimated thesebets account for about a third of the risein oil prices — and in turn gasolineprices — over the past year.

Investors looking for quick pro�tshad touched o� the dramatic rise in oilprices a decade ago. The benchmarkU.S. crude oil surpassed $110 per barrel.Unleaded regular gasoline crested inSeptember 2008 at $4.11 per gallon onaverage. But heavy losses battered mon-ey managers by 2015, and they left themarket.

That’s when surprisingly big �nds ofU.S. shale oil and new drilling tech-niques reached re�ners in high volume,a glut that �lled tank farms and sentprices plummeting to $40 per barrel.

Alarmed by the so-called oil frackingboom in America, Saudi Arabia’s leadersmarshaled the cartel known as the Or-ganization of Petroleum Exporting

Countries in a bid to push up global oilprices by �rst tearing them apart, tryingto drive out U.S. producers. Trying tosustain its huge domestic social pro-grams made possible by oil exports,Saudi Arabia shipped oceans of oilworldwide. At many U.S. gas stations,unleaded fell below $1.90 per gallon.

Although a spate of bankruptciesshook the American Great Plains, homeof the largest frackers, sur-vivors learned to produce atlower cost using machinesto extract oil from layers ofsand and rock. Realizing thefrackers were dug in and re-storing U.S. oil output tohigh levels last seen in the1970s, the Saudis retreatedfrom the price war last year.

As the oil glut eased andspeculators pushed in, de-mand for gasoline heldsteady as U.S. motoristslogged 1.1 trillion miles peryear on 300 million cars and trucks. Oilnosed over $71 per barrel in late Januaryand has leveled o� around $66, markingthe end of the three-year spell of lowprices, Kloza said.

“The average family is going to pay$40 to $50 more for gasoline this yearthan last year,” Kloza estimated. “And$90 over what they paid in 2016. That’sstill $50 to $100 lower than what theypaid every year from 2011 to 2014.”

Although national gasoline priceshave climbed about 40% in two years,economic analyst Joel Naro� said hedoubts the higher expense will diminishconsumer spending on gas or other

items.“This is now beginning to dig into

lower- and middle-income householdwallets,” said Naro�, co-author of the2014 book Big Picture Economics: Howto Navigate the New Global Economy.“But it’s really going to be o�set by thetax cuts” approved by Congress in De-cember.

With families buying ever moreproducts online, ratherthan driving to thestores, Amazon, UPS,FedEx and other distri-bution chain companieswill be pressed to lookfor savings in their oper-ating costs, Naro� said.

“Even though it’s go-ing to be o�set by the taxcuts, I don’t think we candismiss higher gasolineprices,” said Naro�, headof Naro� Economic Ad-visers of Holland, Pa.

If the energy costs ripple throughthe supply chain and tick up the in�a-tion rate, he said, the Federal ReserveBoard perhaps late this year or nextyear might respond with a rise in in-terest rates, particularly if wagegrowth has kicked up and the tax cutsaccelerate the economy.

“If we see rises in energy prices andrises in wages, those factors and in-creasing demand in the economy alllead to rising in�ation,” Naro� said.“That will translate into higher interestrates. Whether the higher rates causethe next recession will partly dependon how high and fast they are raised.”

GETTY IMAGES

GAS PRICES RISEDESPITE OIL BOOMSurging U.S. output, Saudi decline attract speculators anew

Ted EvanoffUSA TODAY

Consumers aren’t getting the lower gas prices at the pump that they might

expect in light of booming U.S. oil production. JUSTIN SULLIVAN/GETTY IMAGES

“This is now

beginning to dig

into lower- and

middle-income

household

wallets.”

Joel NaroffEconomic analyst

SAN FRANCISCO – Amazon’splanned test of its own delivery ser-vice from merchants’ warehouses toits ful�llment centers is the �rst step ina long-term strategy that could changehow packages make the �nal journeyto your door, possibly resulting in low-er prices and faster shipping times forconsumers.

The experiment is expected tolaunch sometime later this year in theLos Angeles area with a handful ofcompanies that sell goods on Ama-zon’s site, sources familiar with theproject who asked to remain anony-mous because they weren’t authorizedto speak publicly told USA TODAY.

The proposed service would allowthird-party sellers — whose goodsmake up the majority of those sold onAmazon — to have an Amazon truckcome to their warehouse, pick up pal-lets of packages and take them to an

Amazon ful�llment center, where theywould be inserted into Amazon’s for-midable delivery system. Right nowthey have to ship them to Amazon cen-ters themselves.

By using Amazon to pick up pack-ages, the merchants could shave asmuch as a day o� delivery times, aboon when time equals money andalso customer satisfaction.

At least in its initial phase, the testwould only involve deliveries betweenAmazon merchants and Amazon’sown ful�llment centers, not delivery tocustomers’ homes.

Once they left the Amazon ful�ll-ment center, the packages would stillbe delivered by one of several deliverysystems Amazon already has in place,including UPS, FedEx, the U.S. PostalService and local delivery contractors.

In the longer term, the project couldexpand into a larger, full-service deliv-ery system that would circumventAmazon’s traditional last-mile ship-pers such as UPS and FedEx.

The Wall Street Journal �rst report-ed on Amazon’s delivery service plans.

Amazon would not comment on thereports and in a statement to USA TO-DAY said only that it was always inno-vating and experimenting on behalf ofcustomers and the businesses that sellon Amazon to create faster, lower-costdelivery choices.

Amazoneyes newinroads indelivery Retailer to experimentwith business pickup

Elizabeth Weise and Mike SniderUSA TODAY

Amazon may try bringing packages

from third-party merchants to its

ful�llment centers. AMAZON