Stocks, gold hit by broad sell-off on global jitters

Raise cash, head for the sidelines.

That was the guiding sentiment in stock and commodity markets Thursday, as some investors and traders sold what they could and looked for a hiding place amid fresh doubts about the global economy.

Commodities took the heaviest hit: Gold futures dived $54.00, or 3%, to $1,719.80 an ounce in New York, the biggest one-day drop since Sept. 23.

The ThomsonReuters/Jefferies CRB index of 19 commodities slumped 2.5%, the biggest decline since Sept. 30. Corn, wheat, oil, cotton and copper all were sharply lower.

“There is liquidation across the board,” said Frank Cholly Sr., a senior commodities broker at RJO Futures in Chicago.

On Wall Street, stocks ended broadly lower for a second day. The Dow Jones industrial average, which tumbled 190 points on Wednesday, fell 134.86 points, or 1.1%, to 11,770. That cut the index's year-to-date gain to 1.7%.

Broader indexes were weaker. The Standard & Poor's 500 fell 1.7%; the Nasdaq composite lost 2%.

Some investors ran back to U.S. Treasury bonds, pushing the yield on the 10-year T-note down to 1.96% from 2.00% on Wednesday.

Many traders blamed continuing fears that Europe is headed for a major blow-up as its debt crisis worsens. Spain and France sold new bonds and were forced to pay yields far above the levels of a month ago.

General Motors Chief Executive Dan Akerson told the Detroit Economic Club that the European crisis is "much more serious" than the 2008 bursting of the credit bubble. GM shares fell 86 cents, or 3.8% to $21.79, a six-week low.

Still, Europe wasn’t a complete disaster Thursday: Italian bond yields pulled back from recent highs. And European stock markets were mostly down between 1% and 1.5%, relatively modest declines compared with the worst days of the last few months.

Meanwhile, markets seemingly ignored upbeat U.S. economic data, including a drop in new claims for jobless benefits to the lowest level since early April.

As they did in late September, some investors and traders may just be cashing out of whatever’s easiest to sell. That would include U.S. blue-chip stocks. The Dow is down 3.2% since Friday.

With so much uncertainty about Europe, and with the U.S. congressional deficit-cutting panel facing a Nov. 23 deadline to come up with a plan, some market players may just be calling it quits on 2011 early.

“I think it’s, ‘Just get out of things and wait til next year,’ ” said Frank Lesh, futures analyst at FuturePath Trading in Chicago.

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Photo: Gold jewelry, coins and bars are arranged for a photograph at a GoldMax store in Atlanta. Credit: Bloomberg News

Price of Thanksgiving dinner up 13%, biggest jump in two decades

Diners might not be in a thankful mood as they sit down in a few days to a Thanksgiving dinner that cost 13% more than it did last year.

The price of a classic holiday meal for 10 people will hit $49.20, jumping from $43.47 in 2010, the American Farm Bureau Federation said Thursday. That's the highest increase since 1990, as the cost of sweet potatoes, rolls, stuffing and even whipped cream spiked this year.

Bad weather, rising commodity prices and other factors have caused a run-up in food and beverage prices over the last few months.

On Nov. 24, a 30-ounce can of pumpkin pie mix will cost 16% more than it did last year, the farm group said. A pound of frozen green peas will be 17% more expensive, while a the cost of a gallon of whole milk will jump 13%.

But the biggest increase will be the turkey -– a 16-pound bird is expected to run about $21.57, or 22% more than in 2010. Economists with the farm group pegged the leap to strong demand in the U.S. and abroad.

"Retailers are being more aggressive about passing on higher costs for shipping, processing and storing food to consumers," John Anderson, a senior economist with the group, said in a statement.

The report, which the federation says is "an informal gauge of price trends around the nation," is the its latest in a series that began in 1986. Back then, a Thanksgiving meal cost $28.74.

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Photo credit Credit: Kirk McKoy / Los Angeles Times

Gold once again pushing $1,800 an ounce

Eurozone instability has the price of gold back to flirting with $1,800 an ounce, with the spot price closing at $1,797.60 on Monday.

After more than six weeks below the mark, the metal’s sudden resurgence last week has analysts once again on the lookout for possible momentum toward $2,000 an ounce.

But $2,000 is “a big psychological number,” said James Steel, chief commodities analyst for HSBC. The closest gold’s gotten to breaking through is when it soared to $1,88.70 an ounce Aug. 22.

Since then, the metal’s price flattened as stocks plummeted, reaching $1,592.70 an ounce Sept. 26. Analysts suspected that investors were selling as much as they could to raise cash.

October and the first week of November brought a steady stream of concerns over the debt crisis in Greece and Italy, causing gold to shift back to its classic role as a haven in times of turmoil.

With pressure on Italian Prime Minister Silvio Berlusconi to resign and Greek Prime Minister George Papandreou’s weekend ouster, analysts believe gold will hold above $1,800 for months.

“It’s going to last for some time and be the driving force for the market for the rest of the year,” Steel said. “Gold’s gone back to behaving more normally.”

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U.S., California fuel prices may reach record highs in 2012

A combination of burgeoning global demand and rising U.S. exports will leave California and national gasoline and diesel prices at such a high level by the end of the year that they could rise to all-time record highs in 2012, analysts said Monday.

Americans are currently on pace to spend a record $489 billion on gasoline in 2011 because prices have remained at high levels all year. The only year that came close to the current situation was 2008, when U.S. motorists spent about $448 billion on gasoline. But even though oil and refined fuel prices climbed to record highs in 2008, they quickly fell afterward. That is not the case this year.

"We are at the highest fuel prices ever for this time of year, even though they have dropped a bit in recent weeks," said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey, who made the $489-billion projection. "I think we will see prices in 2012 that will break the records set in 2008."

In the summer of 2008, the national average for a gallon of regular gasoline reached $4.114, according to the U.S. Energy Department. In California, a gallon of regular gasoline reached $4.588.

The current national average is $3.407 for a gallon of regular, down from $3.443 last week, according to the AAA Fuel Gauge Report, which tracks closely with the Energy Department numbers. That shattered the old record for this week of the year: $3.013 a gallon, set in 2007.

In California, a gallon of regular gasoline is averaging $3.838, down slightly from $3.841 a week ago. Again, that is substantially higher than the old record for this week of the year of $3.231 a gallon set in 2007.

The primary reason for the stubbornly high prices is demand in Latin and South America, which is driving record U.S. exports of fuel to those parts of the world, particularly in the form of diesel. U.S. refiners are also making more diesel at the expense of gasoline production, Kloza said.

"Demand for gasoline is down in the U.S. by 4% compared to last year, but global demand has more than made up for that," Kloza said. "If you want to blame someone for the high prices, blame South America."

Another expert said that gasoline prices could be even worse than they are right now, given that world oil prices are again on the rise.

The European commodities trading benchmark, Brent North Sea crude, was up $2.14 during trading to $114.11 a barrel, its highest since Sept. 15. The U.S. benchmark, West Texas Intermediate crude, was up 77 cents to $95.03 a barrel on the New York Mercantile Exchange.

"The national average is just one penny away from being the lowest we've seen since the start of March, even as crude oil prices have risen," said Patrick DeHaan, senior petroleum analyst for GasBuddy.com. "So it does remain surprising that average prices have moved very little."

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Chart: The AAA's rolling 12-month average for regular gasoline prices in the U.S. and California is well above 2010 levels. Prices may hit new highs in 2012, experts say. Credit: AAA Fuel Gauge Report

Gold jumps as European Central Bank cuts interest rates

Gold broke out to a six-week high Thursday after the European Central Bank surprised markets by cutting interest rates.

For investors who believe that paper currencies are headed for further debasement by central banks, the move provided a good excuse to shovel money into precious metals as an alternative.

Near-term gold futures in New York rose $35.50, or 2.1%, to $1,764.20 an ounce, the highest closing price since Sept. 21.

Silver got a smaller lift, adding 56 cents to $34.49 an ounce. Silver had reached a five-week high of $35.29 last Friday.

The ECB, under new chief Mario Draghi, cut its benchmark short-term rate to 1.25% from 1.50%, in the first reduction since May 2009.

Draghi said the cut was justified because he believed the Eurozone economy was headed for a “mild recession.” Europe has been reeling from its debt crisis and from the austerity imposed by government spending cuts.

The euro currency initially slid after the surprise rate move, falling as low as $1.367 from $1.374 on Wednesday. But the euro rebounded after Greece’s prime minister reneged on his threat to hold a voter referendum on the terms of the country’s bailout by the rest of Europe. The euro was at $1.382 at about 1 p.m. PDT.

Draghi vowed the ECB would not accede to calls that it print massive amounts of new money to boost its purchases of sovereign bonds in Europe. But that didn't deter gold buyers.

Gold had rocketed in August, reaching a record closing high of $1,888.70 an ounce Aug. 22, as stock markets tumbled worldwide on fears that the Eurozone would implode.

But as stocks fell further in September, gold and silver too were slammed. Many analysts say the metals took a hit as some investors and traders sold whatever they could to raise cash amid continued market turmoil.

After bottoming at $1,595 on Sept. 26, gold has been fighting its way higher again. It’s now down 6.6% from its August peak but up 24% year to date -- on track for an 11th straight annual gain.

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Photo: Gold coins and bars. Credit: Mike Segar / Reuters

Amid price increases, snack giant Kraft profit up 22%

Packaged foods leader Kraft Foods Inc. pulled in $13.2 billion in revenue in the third quarter, an 11.5% increase from the same period last year.

The company, parent to brands such as Oreo, Maxwell House and Oscar Mayer, said its net income was $927 million, up 22%. Per-share earnings rose to 52 cents in the quarter that ended Sept. 30,  up from 43 cents a year earlier.

Revenue was up 4.4% to $6.1 billion in North America, even as the company hiked up some of its prices to adjust for rising commodity prices. 

Starting next week, the company will raise prices for its Planters peanut butter by 40%. Kraft only recently began bringing down the wholesale prices on its coffee after instituting a string of increases last year. 

In August, Kraft announced plans to split into two separate public companies, one focusing on the global snack business and the other managing North American grocery dealings. The process will take about a year, the Northfield, Ill.-based company said.

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Earnings report: Big 3rd-quarter profits for Occidental, Exxon-Mobil

Occidental Petroleum saw its profit rise like an old-style gusher in the third quarter, up nearly 50% to $1.77 billion compared to a year earlier, the company said Thursday. It benefited, in part, from record domestic production that helped offset losses in the Middle East.

Occidental’s $2.17 per share compared with $1.19 billion, or $1.46 per share, a year earlier. Sales also jumped 26.1% to $6.01 billion.

“The third-quarter domestic production was 436,000 barrels per day  ... [the] highest in Occidental's history,” said President and Chief Executive Stephen I. Chazen. It was a showing that easily surpassed Wall Street expectations of $1.97 per share and profit on revenue of $5.46 billion, according to FactSet.

“We weren’t expecting any production growth for Occidental. It was very highly unlikely because of its exposure to Libya,” said Fadel Gheit, senior oil analyst for Oppenheimer & Co., referring to the North African nation where production had ceased during a hard-fought civil war. “Those barrels are gone,” Gheit added.

Argus Research analyst Phil Weiss said Occidental’s production in California has also been slowed by delays in getting permits. But Weiss said that the company did well because it has positioned itself to perform profitably in almost any political situation and earnings environment.

“Occidental remains one the industry’s best-managed firms,” Weiss said.

Occidental's daily oil and gas production volumes averaged 739,000 barrels a day, compared to 706,000 in the third quarter of 2010. Domestic crude production rose by 56,000 barrels a day from such places as South Texas, the North Dakota Williston Basin and California.

The world’s biggest integrated oil firm, Exxon Mobil Corp., reported a third-quarter profit of $10.33 billion, or $2.13 a share, compared to $7.35 billion, or $1.44, a year earlier.

The results were indicative, Gheit said, of an industry enjoying substantially higher world oil prices compared to the third quarter a year ago. But sequentially, the average profit margins trailed those recorded in the second quarter when oil prices hit their peak for this year.

For the major integrated oil companies, most of the profit came in the so-called upstream segment, which includes exploration and production. Downstream segments, which include the business of refining oil into fuels like gasoline and diesel, did not perform as well.

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Photo: Occidental headquarters in Westwood. The company's earnings were boosted by record domestic oil production in the third quarter. Credit: Kevork Djansezian / Associated Press

Consumer Confidential: Netflix down, food prices up, masks recalled

Here's your turn-the-beat-around Tuesday roundup of consumer news from around the Web:

-- Netflix is still smarting from its screwups. The company's shares plunged 35% after the one-time Wall Street favorite revealed a massive departure of subscribers angered by price increases and other questionable changes at the rental service that was created to make entertainment a snap. Netflix revealed late Monday that it ended September with 23.8 million U.S. subscribers. That's down about 800,000 from June and worse than what the company had hinted at before. In September, the company predicted it will lose about 600,000 U.S. customers. And it may get worse. Netflix said it expects more defections in coming months. Clearly this company better come up with some good news, and soon, or more people will jump ship.

-- Your grocery bill is still going up. The government says food prices are expected to climb by as much as 4.5% this year, an increase of one-half of a percentage point from its prior forecast, as higher commodity costs continue to filter down to consumers. The estimate comes after months of increases in individual items, particularly meat and poultry. Pork and beef prices have soared to record highs this year as surging export demand, particularly from China, has driven prices higher even while domestic demand remained sluggish. A jump in grain prices, which increases the cost of feeding livestock, has driven the broader jump in food prices this year.

-- Heads up: There's a recall of Halloween masks. Target is recalling about 3,400 children's frog masks because they lack proper ventilation. When secured in place across a child's face, the mask poses a risk of suffocation. The Chinese-made masks were sold at Target outlets nationwide from August through September for about $1. If you bought one, return the mask to any Target for a full refund.

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Photo: Netflix is getting slammed by investors for losing subscribers. Credit: Paul Sakuma / Associated Press

 

Chinese inflation remains high amid signs of economic slowdown

Inflation in China moderated in September for the second consecutive month, but still remained stubbornly high amid growing signs of a global slowdown.

China’s consumer price index, the main gauge of inflation, grew 6.1% from a year earlier, down slightly from a 6.2% rise in August.

The index remains far above the 4% annual target set by the central government, making it difficult to loosen monetary policy if China’s economy is pulled into a global decline.

There’s evidence that the world’s second-largest economy may be slowing down.

Trade data released Thursday showed Chinese exports decreased in September over slackening European demand and a strengthening yuan, the country’s currency.

Prices for crude oil and copper fell on news of the data, reflecting jitteriness in China’s ability to import commodities as voraciously as it has in the past.

Meanwhile, thousands of small businesses in China’s coastal provinces are reportedly being squeezed by the country’s credit crunch. China’s State Council said it would support the small firms by increasing loans and offering tax breaks.

But central leaders say reining in inflation remains an overall priority –- dulling expectations that policymakers will loosen credit, drop interest rates or lift buying restrictions in China’s stagnant residential property market.

“For the moment, we remain in policy stasis -– no more tightening, but no real loosening -– while Chinese authorities nervously eye developments in the Eurozone,” said Alistair Thornton, an analyst for IHS Global Insight in Beijing. “It is the Eurozone and U.S. that form the greatest downside risk for China’s outlook.”

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Photo: Customers look at prices for vegetables at a supermarket in Hefei, China. Credit: Reuters

Stocks start fourth quarter with a plunge as economic fears resurge

It’s a new quarter on Wall Street, but not a new mind-set: Nervous investors worldwide kicked off the final three months of the year Monday by dumping stocks and fleeing once again for the classic haven of Treasury bonds, as fears over the global economy resurged.

In a potentially ominous sign, the Standard & Poor’s 500 index closed below the 1,120 mark, which is where it had bounced three times since early August. The S&P sank 32.19 points, or 2.8%, to end at 1,099.23, a new 52-week low.

The Dow industrials slumped 258.08 points, or 2.4%, to 10,655.30, also a 52-week low, after diving 12% in the third quarter.

Despite data Monday showing an uptick in U.S. manufacturing activity in September and strong car sales for the month, those reports were good only for a modest rally at the beginning of trading, before sellers took control.

“Everything has a negative bias now,” said Andy Brooks, a veteran stock trader at T. Rowe Price Group in Baltimore. "Where's the glass-half-full crowd?"

Stocks had fallen in most Asian markets overnight, and the trend continued in Europe after Greece said it wouldn’t meet targets for reducing its budget deficit in 2011 or 2012, despite a vicious austerity campaign to cut spending.

That raised once again the prospect of a Greek bond default, even though many analysts believe the rest of the Eurozone will pony up money Greece is expecting this month to stave off catastrophe.

Battered European stock markets were mostly down between 1% and 2.3% for the day, after rebounding last week. The euro fell 1.6% to an eight-month low of $1.318. Bank stocks led market losses in Europe and in the U.S., with Bank of America diving 9.6% to $5.53, a 2-year low.

Investors also have become fearful that China’s economy could slow more than expected. A gauge of Chinese manufacturing activity improved slightly in September, but the Shanghai composite stock index fell to a 2 1/2-year low Monday.

Concerns about China helped drive prices of many commodities down for a second session. U.S. crude oil futures dropped $1.59 to $77.61 a barrel, the lowest since September 2010 -- which at least may offer consumers some relief at the pump.

But gold bounced, as some buyers moved in after the metal tumbled 11% in September. Near-term gold futures rose $35.60 to $1,656.00 an ounce.

With equity markets sliding anew, some investors and traders looking for a place to hide poured more cash into U.S. Treasury bonds, driving market yields down.

The 10-year T-note yield, a benchmark for mortgage rates, sank to 1.75%, down from 1.92% on Friday and near the recent generational low of 1.72% reached on Sept. 22. The renewed slide in Treasury yields may give homeowners who can refinance their mortgages a second chance to lock in record-low rates.

Although Treasury yields at these levels offer little in the way of interest income, many buyers are simply focused on protecting their principal against the possibility of things getting much worse in the global economy, analysts say.

The European government-debt situation “does not look good, and we’re trading off that story,” said Bill Larkin, a bond manager at Cabot Money Management in Salem, Mass.

What’s more, the Federal Reserve on Monday kicked off its program of selling shorter-term Treasury issues to buy longer-term Treasuries, hoping to pull those interest rates even lower. The Fed bought $2.5 billion of bonds maturing between 2036 and 2041.

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Photo: A trader on the Hong Kong Stock Exchange, which plunged 4.4% on Monday amid another global stock rout. Credit: Vincent Yu / Associated Press

Stocks pare gains but still post third straight rise on Europe hopes

 

U.S. stocks ended broadly higher Tuesday but surrendered a big chunk of their gains by the closing bell, amid new rumors out of Europe.

The Dow Jones industrial average rose for a third straight session, finishing with a gain of 146.83 points, or 1.3%, to 11,190.69 after rallying as much as 326 points by midday.

Share prices pulled back in the final 90 minutes after London’s Financial Times reported that some Eurozone countries were pressing for Greece’s private bondholders to take bigger haircuts on the debt as part of any new workout plan for insolvent Athens.

That risks throwing yet another wrench into negotiations to keep Greece from melting down and taking the rest of Europe with it.

Stocks and commodities worldwide had rocketed overnight on optimism that European authorities were getting closer to a framework for staving off a deeper financial crisis on the continent. German Chancellor Angela Merkel pledged again to support Greece and preserve the Eurozone, though she faces broad opposition in Germany to a proposed expansion of Europe’s rescue fund for troubled member states. A vote on the fund is set for Thursday in the German parliament.

European stock markets staged sharp rebounds after their drubbing of recent weeks. The German market soared 5.3%; Spanish shares jumped 4%.

Commodities rose on hopes that progress in Europe would damp fears about a new global recession. U.S. oil futures rose $4.21 to $84.45 a barrel. Gold rebounded $58.10 to $1,650.60 an ounce.

But many analysts warned against reading too much into Tuesday’s rallies, noting that some of the gains stemmed from “short covering” by traders who had been betting that prices would continue to slide in the near term. As stocks and commodities jumped instead the short-sellers faced pressure to jump in and close out their bets.

On Wall Street, traders said some money managers were selling bonds and buying stocks as part of quarter-end portfolio rebalancing strategies: With bonds appreciating while stocks have sunk this quarter, rebalancing requires managers to pare their bond stakes while adding to stocks. The quarter ends Friday.

As bond prices fell the yield on the bellwether 10-year Treasury note rose to 1.98%, up from 1.90% on Monday and the highest since Sept. 16. The yield had plunged as low as 1.72% last Thursday, a day after the Federal Reserve said it would shift its massive bond portfolio more toward longer-term securities and away shorter-term issues.

Stock market bulls say the biggest positive about this week’s trading is that the U.S. market has once again held above its summer lows -- suggesting that many investors and traders don’t see the economic outlook as justifying another big breakdown in share prices.

Despite the wild volatility of the last few months, the Dow is down just 3.3% year to date. The Standard & Poor’s 500 index, which rose 1.1% Tuesday to 1,1.75.38, is off 6.5% year to date.

By contrast, most major stock indexes in Europe and Asia have suffered double-digit percentage declines this year.

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Dollar soars while gold and silver fall on recession fears

Buoyed by new recession fears, the soaring dollar trampled gold Thursday, pushing the spot price of the precious metal to its lowest point in more than a month.

A day after the Federal Reserve announced plans to swap $400 billion of short-term government debt for longer-maturity U.S. Treasury bonds, disappointed investors kicked the Dow Jones down more than 400 points.

“There’s a meltdown in stocks; the Fed came up short,” said Marin Aleksov, chief executive of precious metals broker Rosland Capital in Santa Monica. “People are scrambling to get cash to cover their position. It’s driven by emotions and uncertainty at this point.”

Added James Steel, chief commodities analyst for HSBC: “Normally, declines in equity markets would be good for gold. But there’s a twist to it today because the declines globally are so severe.”

Commodities slid as the dollar hit its highest point since February. Gold sank to around $1,740 an ounce after edging toward $2,000 last month. Palladium was around $656, its lowest level in nearly a year. Silver swung down more than 8%.

The ThomsonReuters/Jefferies CRB index of 19 major commodities was down 4.4% at midday, the biggest drop since May 5.

The Fed’s warning that there were “significant downside risks to the economic outlook” sparked more concerns. Especially for metals with industrial uses such as silver, platinum and palladium, a slowing economy signals less manufacturing demand to many investors.

Gasoline prices remain far above 2010 levels

Retail gasoline prices are falling, but at rates that are difficult to notice, especially in California. Perhaps even worse for consumers during a weak economic recovery, the pump pain remains locked in far above the cost of filling up a tank a year ago.

The average price of a gallon of regular gasoline in California dropped just 1.6 cents a gallon in the past week, to $3.93, according to the AAA Fuel Gauge Report. A year ago, a gallon of regular would have cost $3.008. Nationally, prices were falling at a faster pace, down 6.1 cents to an average of $3.588 a gallon. But a year ago, the national average for regular gasoline was  $2.731 a gallon.

The AAA Fuel Gauge Report gets its averages from credit-card receipts compiled from more than 100,000 retail outlets around the U.S. by the Oil Price Information Service and by Wright Express.

Some analysts chose to view the price declines in the best possible light. Patrick DeHaan, a senior petroleum analyst at GasBuddy.com, where members report the highest and lowest prices they see, said, "It took the end of summer for a drop in retail gasoline prices, but I'm sure motorists won't complain that we're finally seeing some drops."

DeHaan added: "As we enter October we'll see markets slowly quiet down, with retail gasoline prices falling to $3.35-$3.55 on average by Thanksgiving, with the exception being typical hotspots on the West Coast."

But other experts noted that the price drops won't be enough to boost the confidence of consumers who remember what they were paying for fuel last year.

Under the heading "EXPENSIVE GAS," Monday's Jacob Gold newsletter for investors said: "American consumers spent $44.9 billion at gas stations in August 2011, up $7.7 billion from the $37.2 billion spent at gas stations in August 2010." Gold is president and chief executive of Jacob Gold and Associates, a wealth-management firm in Arizona.

In other energy news, crude oil prices were driven lower in early trading on fears that the European debt crisis would weaken demand for the commodity. The U.S. benchmark crude, West Texas Intermediate, was down $2.46 to $85.50 a barrel on the New York Mercantile Exchange. Oil prices are down 6.4% so far for the year.

The European benchmark, Brent North Sea crude, fell $2.56 to $109.66 a barrel on the London-based ICE Futures Exchange.

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Graphic: The AAA Fuel Gauge Report's 12-month rolling average for the price of regular gasoline in California and around the nation. Credit: AAA

Gasoline prices on track for a record year of pain at the pump

U.S. motorists are on pace to spend $491 billion for gasoline this year, the most ever.

Fuel prices have been rising again because of expensive crude oil and increased exports of gasoline and diesel to other countries. Although gasoline prices may decline for a few weeks after the switch to winter blends, which are less costly to produce than summer blends, our pump-price woes won't be going away, fuel experts said.

"The 30 days between now and mid-October will be the most hospitable days in the country for dropping prices," said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey. "But then the drumbeats will start about fears of a second Arab Spring. Demand outside of Europe and the U.S. continues to rise. By spring, Americans will be wrestling with $4 gasoline in a lot of markets."

At one point this year, retail gasoline prices were rising faster than they were even in 2008, when average prices hit record highs of $4.588 a gallon in California and $4.114 nationally.

The run-up in 2008 was followed by the biggest-ever fuel-price collapse. By the last week of December, 2008, motorists had blissfully returned to the much more affordable prices of early 2005, with a gallon of regular in California selling for an average of just $1.810. Nationwide, the average price was $1.613 a gallon.

As a result, the average price nationwide for all of 2008 ended up only about $3.25 a gallon, according to Kloza. But this year, no collapse in the market is anticipated. The average price for the year is running at about $3.66 a gallon, putting the country on track to pay a record $491 million for gasoline for all of 2011, Kloza projects.

The current average price for a gallon of regular gasoline in California is $3.946, according to the AAA Fuel Gauge Report. That's the highest ever for mid-September, after the end of the summer driving season. Nationally, the average is $3.649 a gallon, also a record for this time of year.

Carol Hill, a 25-year-old Los Angeles resident who waits tables in a restaurant on the Third Street Promenade in Santa Monica, said she was disgusted that she had to pay $3.95 a gallon to fill up her 10-year-old Honda Accord at a BP-Arco station on Lincoln Boulevard near Ocean Park Boulevard.

"The price of gasoline always goes up every year and never falls by as much. So, every year the price is higher. There's always some excuse someone has. All I know is that I'll be very happy the day someone hands me the keys to an electric car," Hill said.

Another reason 2011 is turning out so costly at the pump: U.S. gasoline supplies aren't growing even though U.S. demand is weak.

The country's consumption of gasoline is running 157,000 barrels a day below 2010 levels, according to the federal Energy Department. But gasoline inventories in the U.S. currently total 208.8 million barrels, 16.3 million barrels below the same period last year.

The amount of gasoline on hand in the U.S. isn't rising because an increasing amount of excess fuel here is going overseas.

In fact, in recent months the U.S. has become a net exporter of refined fuels, according to Energy Department statistics. That's a sea change from as recently as May, when U.S. imports of refined fuels still exceeded exports by 800,000 barrels a day. The latest data show daily exports topping imports by 467,000 barrels, with much of the outgoing fuel heading to Latin America.

"We do know that there have been more sales overseas this year compared to previous years. That has been most evident in the Midwest. When we look at the BP Whiting refinery in Indiana, which is one of the largest in the country, you see the output is strong, yet we are still seeing a lot of high prices in the markets this refinery is serving," said Gregg Laskoski, senior petroleum analyst for GasBuddy.com.

"It's troubling for consumers to try to reconcile the high price they see at the pump when the seemingly local refineries that served them in the past" are sending more of their products overseas, Laskoski added.

Consumers may also find it hard to reconcile the pump prices they're paying with relatively stable domestic crude-oil prices.

This is most evident in states like California, which does not have access to pipelines that could bring it some of the relatively plentiful West Texas Intermediate crude, the U.S. benchmark for oil trading on the New York Mercantile Exchange.

This year, there has been a huge spread between the U.S. benchmark and its European counterpart, Brent North Sea crude, which is traded on the ICE Futures Exchange in London. The price of Brent crude has been volatile this year because of the so-called Arab Spring, which has brought regime changes in Tunisia, Egypt and Libya as well as with unrest in Yemen and Syria.

Brent futures rose 26 cents to $113.03 a barrel Monday while the U.S. benchmark rose 80 cents to $88.04 a barrel. That narrowed slightly the price difference between the two benchmarks, which hit a record $27.23 a barrel on Sept. 6.

U.S. motorists suffer from the higher costs of imported crude oil, particularly in states like California. In 2000, for example, California produced about half of its oil needs and got about one-fourth from Alaska. That year, as a result, the state imported just 26% of its oil.

But in an expensive reversal of fortune, California now produces just 38% of the oil it consumes and imports 48% from sources tied to the much higher price of Brent North Sea Crude. Alaska oil meets only 14% of the state's needs -- and it's gotten much more expensive, trading at $24 a barrel higher than West Texas Intermediate.

The bottom line: U.S. motorists will not see much in the way of price relief in the coming months.

"We're not going to see a big drop in gasoline prices," said Phil Flynn, an analyst with PFGBest Research in Chicago. "We are probably at the low point for oil prices right now, and there is too much going on in the rest of the world, from higher demand and from reduced exports from places like Libya, for oil not to work its way back up in the coming weeks and months."

ALSO:

Gasoline prices edge higher in California

Rising fuel exports keep U.S. gasoline prices from falling

-- Ronald D. White

Photo: Pump prices will probably decline only slightly in the coming weeks.

Consumer Confidential: Holiday sales, food prices, VW recall

Here's your mo'-money Monday roundup of consumer news from around the Web:

-- Merry Christmas. Retailers are already kicking the holiday season into gear. Christmas merchandise has been at Costco stores since Sept. 1 and will begin showing up on some Home Depot shelves Sept. 19. Kmart and Sears will begin selling Christmas trimmings Sept. 25. And Wal-Mart and J.C. Penney will start selling Christmas merchandise before month's end. More than 37% of shoppers — including 42% of women — plan to do some holiday shopping by Halloween, according to the National Retail Federation. Retailers are happy to oblige as they chase an estimated $450 billion of holiday spending. Ho ho ho.

-- But save some cash for your grocery bills. Food prices could rise next year because an unseasonably hot summer probably damaged much of this year's corn crop. The Department of Agriculture estimates that a surplus of 672 million bushels of corn will be left over at the end of next summer. The estimated surplus is down from last month's forecast and well below levels that are considered healthy. This spring, farmers planted the second-largest crop since World War II. But high temperatures stunted the plants. More expensive corn drives food prices higher because corn is an ingredient in everything from animal feed to cereal to soft drinks. It takes about six months for changes in corn prices to affect products at the grocery store.

-- Heads up: Volkswagen is recalling more than 30,000 Jetta sedans from the 2011 and 2012 model years because the tailpipes can stick out too far and burn people. The National Highway Traffic Safety Administration says stainless steel exhaust pipe tips installed at ports of entry and dealerships can stick out farther than the factory-installed tailpipes. If the tips are hot, they can burn people on the legs. Volkswagen received complaints of burns in July and began investigating. The company says the complaints came from fewer than 10 people. Dealers will inspect the recalled cars to see if the exhaust tips are too long and will replace them free of charge if necessary.

-- David Lazarus

Photo: Look who's already getting ready for work. Credit: CBS

 

Retail gasoline prices at an all-time post-Labor Day high

Gasoline prices are at an all-time high for the week following Labor Day and the end of the traditional summer driving season.

The average price of regular gasoline in California was $3.946 a gallon, according to the AAA Fuel Gauge Report. That was an increase from $3.888 a gallon last week, and it was a whopping 91 cents a gallon higher than the price a year ago.

The latest gasoline prices in the state also topped the previous post-Labor Day high of $3.859 a gallon in September 2008.

Nationally, the average price of a gallon of regular gasoline reached $3.659 a gallon, up 1.2 cents since last week. That was also a record for the week following Labor Day.

Experts warned not to expect much relief in the coming weeks.

"You'll see some price drops, particularly after we start to switch over to the winter blend gasolines that are cheaper to make than summer blends, but there is too much demand for refined fuels in the rest of the world for prices to drop very far in the U.S.," said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.

ALSO:

Rising fuel exports keep U.S. gas prices high

Sunoco to end struggling refinery business

-- Ronald D. White

Chart: The AAA rolling 12-month averages for a gallon of regular gasoline. Credit: AAA

U.S. exports more fuel, keeping gasoline prices high

Oil prices are still far below their highs for the year, but U.S. motorists aren't benefiting from lower prices because the nation's refineries continue to boost exports and reduce supplies available in the U.S.

In California, the average price of a gallon of regular gasoline jumped 12.1 cents a gallon in just the last week, to $3.941, according to the AAA Fuel Gauge Report. That's also 89 cents a gallon higher than the price a year ago.

Nationally, the AAA said, the average price climbed 4.8 cents a gallon to $3.66 over the last week -- 97.7 cents higher than the same day in 2010.

"The U.S. petroleum balance of trade continues to shift in a 'sea change' that is both literal and figurative. For the tenth week in a row, Energy Department numbers show that the country exported considerably more refined products cargoes than were imported," said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.

Much of the refined product involved in the exports is diesel, Kloza said, meaning that refineries are opting to devote more of their attention to that fuel at the expense of gasoline. The customers are mostly in Central America and South America.

"Notwithstanding disappointing U.S. demand, the worldwide merchant demand for U.S.-produced fuel is strong," Kloza said.

Five years ago, U.S. imports of refined fuels outpaced exports by a 3 million barrels a day, according to Energy Department statistics. Two years ago, fuel imports into the U.S. were still outpacing exports by 1.5 million barrels a day.

No longer.

The most recent statistics show exports of refined products from the U.S. outpacing imports by 476,000 barrels a day.

"That figure is a new modern-day record. We are a net exporter now. If not for high prices in the U.S., it would be something to cheer about in terms of helping the deficit. But in the U.S., it's just going to get under people's skin. It's like we're selling off our birthright," Kloza said.

In other energy news, U.S. benchmark West Texas Intermediate crude oil for October delivery tumbled $2.04 to $84.41 a barrel during trading on the New York Mercantile Exchange. Prices have fallen 7.6% so far in 2011. The European benchmark, Brent North Sea crude, rose $1.07 to $111.15 a barrel on the ICE Futures Exchange in London.

ALSO:

Libyan oil situation remains uncertain

Stocks falls as Europe worries deepen 

-- Ronald D. White

Image: A graphic tracks the AAA's rolling 12-month average price for a gallon of regular gasoline. Credit: AAA

U.S. exports more refined fuel, keeping domestic prices high

Oil prices are still far below their highs for the year, but U.S. motorists aren't benefiting from lower prices because the nation's refineries continue to boost exports and reduce supplies available in the U.S.

In California, the average price of a gallon of regular gasoline jumped 12.1 cents a gallon in just the last week, to $3.941, according to the AAA Fuel Gauge Report. That's also 89 cents a gallon higher than the price a year ago.

Nationally, the AAA said, the average price climbed 4.8 cents a gallon to $3.66 over the last week -- 97.7 cents higher than the same day in 2010.

"The U.S. petroleum balance of trade continues to shift in a 'sea change' that is both literal and figurative. For the tenth week in a row, Energy Department numbers show that the country exported considerably more refined products cargoes than were imported," said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.

Much of the refined product involved in the exports is diesel, Kloza said, meaning that refineries are opting to devote more of their attention to that fuel at the expense of gasoline. The customers are mostly in Central America and South America.

"Notwithstanding disappointing U.S. demand, the worldwide merchant demand for U.S.-produced fuel is strong," Kloza said.

Five years ago, U.S. imports of refined fuels outpaced exports by a 3 million barrels a day, according to Energy Department statistics. Two years ago, fuel imports into the U.S. were still outpacing exports by 1.5 million barrels a day.

No longer.

The most recent statistics show exports of refined products from the U.S. outpacing imports by 476,000 barrels a day.

"That figure is a new modern-day record. We are a net exporter now. If not for high prices in the U.S., it would be something to cheer about in terms of helping the deficit. But in the U.S., it's just going to get under people's skin. It's like we're selling off our birthright," Kloza said.

In other energy news, U.S. benchmark West Texas Intermediate crude oil for October delivery tumbled $2.04 to $84.41 a barrel during trading on the New York Mercantile Exchange. Prices have fallen 7.6% so far in 2011. The European benchmark, Brent North Sea crude, rose $1.07 to $111.15 a barrel on the ICE Futures Exchange in London.

ALSO:

Libyan oil situation remains uncertain

Stocks falls as Europe worries deepen 

-- Ronald D. White

Image: A graphic tracks the AAA's rolling 12-month average price for a gallon of regular gasoline. Credit: AAA

Gold, silver rocket as recession fears deepen

Gold and silver zoomed again Friday, ignoring strength in the dollar, as the dismal U.S. jobs report for August drove some investors back into haven-seeking mode.

Near-term gold futures in New York closed with a gain of $47.70, or 2.6%, to $1,873.70 an ounce. It was the metal’s biggest one-day advance since early August, and left it just 0.8% below the record closing high of $1,888.70 set on Aug. 22.

Silver also rocketed, rising $1.54, or 3.7%, to $43.02 an ounce. Silver remains below its 30-year high of $48.58 reached on April 29.

The government’s report that the economy created no net new jobs last month stoked fears that recession is becoming a self-fulfilling prophecy, after the global market turmoil in August. With stocks crumbling worldwide Friday, gold and silver attracted frightened money, just as they did for much of last month.

“This economy is in real trouble,” said Matt Zeman, a market strategist at Kingsview Financial in Chicago. What’s more, even though the Federal Reserve is expected to try another rescue by aiming to pull long-term interest rates lower, falling rates could help the case for gold by making bond yields less attractive as an alternative investment.

Gold and silver also got a boost as Europe’s never-ending debt crisis took another bad turn, as Greece fell behind on austerity measures it must meet to qualify for more euro-zone aid.

While the Dow Jones industrial average slumped 253.51 points, or 2.2%, to 11,240.26 on Friday, the average blue-chip stock in Europe fared much worse, tumbling 3.7%.

Europe’s latest mess helped bolster the dollar. The euro fell 0.4% to $1.419, its lowest level since Aug. 10. The dollar also gained against a number of other currencies.

Historically, what’s good for the dollar usually is bad for gold, its archrival. But gold has been in its own bullish world for much of the summer, paying little attention to the dollar’s moves.

The metal now looks primed to try another run for $2,000 an ounce. Gold reached $1,917 intraday on Aug. 22, then was slammed by profit-taking that took the price as low as $1,707 on Aug. 25.

With the economic backdrop worsening, “I think we’re going to see $2,000 gold here very, very shortly,” Zeman said.

The bigger question may be this one: If gold does top $2,000, does that spark another round of profit-taking -- or a panic rush in by investors who've so far missed gold's 11-year bull market?

RELATED:

Job growth grinds to a halt

World stock market tally for August: 2 up, 43 down

2011 shaping up to be worst year ever for new home sales

-- Tom Petruno

Photo: Gold bars at gold and silver separating plant in Vienna. Credit: Lisi Niesner / Reuters

Bad weather raises concern over future food prices

 
Corn futures rose Monday amid speculation that the recent rains in the Midwest won't be enough to ease drought conditions and boost farmers' yields.

Indeed, it has been a brutal year weather-wise for much of the country, particularly for the Midwest and Texas. In the spring there were floods, which made it difficult for farmers to get their crops planted in the ground.

This summer, heat waves have damaged crop fields, and intense droughts in Texas and Oklahoma have resulted in cattle dying and ranchers rushing to sell their animals, even if they took a loss. The extreme weather has raised concerns that a smaller-than-expected supply of corn, soybeans and other core commodity crops might ripple out and keep consumer food prices high in the coming months.

Last month, the U.S. Department of Agriculture cut its forecast for this year’s harvest and predicted that grain inventories, though still hitting record highs, would come in lower than previously expected. Among its estimates: Corn was forecast to hit 12.9 billion bushels, down from previous forecasts of 13.5 billion bushels.

Corn futures in Chicago rose 9 cents on Monday, closing at $7.20 a bushel for a September delivery. The price has jumped 21% from $5.96 a bushel on July 1, and is nearing the three-year high of $7.85 reached on June 9.

ALSO:

USDA cuts crops forecast for soybean, wheat, corn

Lawsuits begin in connection with salmonella-tainted turkey

Tomato scion Frederick Scott Salyer beefs up his legal team

-- P.J. Huffstutter

Photo: A corn crop failed to mature in a Texas field this July. A severe drought has caused most non-irrigated crops in the area to fail and forced farmers to abandon some fields to conserve their limited resources. Credit: Scott Olson / Getty Images