Geopolitical events raise gas prices; demand low

-- Geopolitical events are partly to blame for the recent uptick in the price of gasoline, but weak demand is still holding it down.

Prices at the pump jumped 14 cents to $1.64 for regular, self-serve gasoline in the Richmond area and 12 cents to $1.64 in Virginia since the first of the year, according to AAA Mid-Atlantic.

The increase is partly a market reaction to fighting between Israeli and Palestinian forces in the Gaza Strip and a dispute between Russia and Ukraine that reduced natural gas shipments to Europe.

"It is geopolitical considerations . . . that have created this pop in the market," said John Zehler Jr., president of Virginia Fuels Inc., a Mechanicsville-based petroleum distributor. "It certainly does not have anything to do with inventories. Demand is still off tremendously."

Whether fuel prices will continue to rise is difficult to predict, but oil prices are reflecting economic weakness. Light, sweet crude for February delivery fell 93 cents to settle at $41.70 a barrel yesterday on the New York Mercantile Exchange after government reports showed a decline in energy spending and a higher-than-expected increase in commercial crude inventories.

"If prices were going to move higher for the long term, we would have to see the demand change, and we are not seeing that at this point," said Martha Mitchell Meade, a spokeswoman for AAA Mid-Atlantic.

Dave McComas, president and chief executive officer of the Fas Mart Convenience Store Inc. chain, said gas prices rose a little more than 27 cents in two weeks at the wholesale level.

"The market in general was flat today, so we are hoping for a little decrease now," he said. Contact John Reid Blackwell at (804) 775-8123 or .