R.I., Mass. gas prices rise again, as Ukraine issue affects commodities

The cost of a gallon of self-serve, unleaded regular gasoline increased over the last week in both Rhode Island and Massachusetts, the fourth week in a row that fuel prices went up, according to the weekly survey by AAA Southern New England. More

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R.I., Mass. gas prices rise again, as Ukraine issue affects commodities

BLOOMBERG NEWS FILE PHOTO/LUKE SHARRETT
THE PRICE OF GASOLINE increased for the fourth consecutive week in Rhode Island and Massachusetts, as turmoil in Eastern Europe set global commodity markets on edge.
Posted 3/3/14

PROVIDENCE – The cost of a gallon of self-serve, unleaded regular gasoline increased over the last week in both Rhode Island and Massachusetts, the fourth week in a row that fuel prices went up, according to the weekly survey by AAA Southern New England.

Rhode Island saw the price of gas climb 3 cents per gallon to $3.56, which represents an 11 cent rise from a month ago and a level that is 9 cents more than the national average of $3.47. Last year at this time, the cost of a gallon of regular gas cost $3.80 in the Ocean State.

Gas ranged in price in Rhode Island from $3.37 to $3.70 per gallon for regular, $3.69 to $3.90 for midgrade unleaded, $3.76 to $4.10 for premium unleaded and $4.14 to $4.31 per gallon for diesel. Massachusetts saw prices range from $3.35 to $3.70 for a gallon of self-serve, unleaded regular, $3.48 to $3.91 for midgrade, $3.58 to $4.20 for premium and $4.13 to $4.50 for diesel.

Ukraine tensions

Commodities advanced to the highest in almost six months as escalating tension in Ukraine fueled concern that energy and agricultural supplies will be disrupted while increasing demand for gold as a haven.

The Standard & Poor’s GSCI Spot Index of 24 raw materials climbed as much as 2.1 percent to 663.48, the highest since Sept. 9, and was at 661.62 as of 11:28 a.m. in trading on the New York Stock Exchange. Crude oil in New York jumped as much as 2.6 percent, wheat in Chicago surged 7 percent, while gold futures increased 2.5 percent. Corn and gasoline also advanced.

“The uncertainty of how the Ukrainian issue will play out will continue to lift commodities across the board,” Chad Morganlander, a Florham Park, N.J.-based fund manager at Stifel Nicolaus & Co., which oversees about $150 billion of assets, said in a telephone interview. “Ukraine being a major supplier of grain has cast some doubt in the global markets.” Demand for haven assets such as gold “will continue until there’s a more diplomatic approach taken,” he said.

Russia, the world’s largest energy exporter, seized control of the Black Sea region of Crimea in Ukraine, where tension has escalated since Russia-backed Viktor Yanukovych was overthrown as president on Feb. 22. More than half of Russia’s gas exports to the European Union are shipped through Ukraine, which is set to be the third-biggest corn shipper after the U.S. and Brazil and the sixth-largest wheat exporter this year.

The GSCI measure of commodities extended its increase since the end of December to 4.6 percent, rebounding from a 2.2 percent drop last year.

Gas prices

Earlier, natural gas futures jumped as much as 2.8 percent in New York as Ukraine mobilized army reserves and amid speculation that a winter storm moving from the U.S. Midwest to Northeast will boost heating demand. Prices erased the gain, and fell as much as 1.8 percent. U.K. natural gas, which is not part of the commodities index, jumped the most since September 2011.

Russia, which provided 30 percent of Europe’s natural gas last year, sends half of its supplies via Ukraine. So far, Russian gas shipments to Ukraine and the rest of Europe haven’t been disrupted during the crisis.

About 313,000 barrels of crude a day transited via Ukraine in 2013, according to the country’s Energy Ministry. The southern branch of the Druzhba pipeline, which transports about 1.2 million barrels of Russian oil to Europe, passes through Ukraine on its way to refineries in Hungary, Slovakia and the Czech Republic.

Export monopoly

OAO Gazprom, Russia’s gas-export monopoly, may end last year’s agreement to supply Ukraine at a cheaper rate unless it’s paid $1.55 billion owed for fuel, it said March 1. It’s the first time since the overthrow of Yanukovych that Russia has directly used its position as Ukraine’s dominant energy supplier to pressure the new regime.

Wholesale gas in Europe surged in January 2009 after Russia halted pipeline deliveries amid a dispute over prices and transit terms.

Brent advanced for a second day to $111.38 a barrel and West Texas Intermediate crude climbed 2.6 percent in New York. Crimea, home to Russia’s largest overseas naval base, belonged to Russia until Nikita Khrushchev gave it to Ukraine in 1954.

“If the situation is not defused, it has the potential to spark wider economic turmoil through higher oil and gas prices, trade sanctions and a general ratcheting up of global tensions that could endanger the fragile global economic recovery,” Edward Meir, an analyst at INTL FCStone Inc. in New York, wrote in a note today.

Bloomberg News contributed to this report.

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