Gas Prices Higher Now, Could Drop Soon

GasPrices0501.jpg photo by Evan Sears

Oil prices continue to move higher, and gasoline prices in the U.S. have increased for three straight weeks, but pump prices may level off and could drop again in the weeks ahead.

The AAA Daily Fuel Gauge Report said the national average for regular unleaded Thursday was $2.58, an increase of 9 cents in the past week and the highest it’s been since mid-December.

Though most of the recent increase is due to rising oil prices, part of it also has been because of seasonal maintenance and production issues at refineries, particularly on the West Coast, and the annual spring changeover to summer gasoline blends. That has restricted the supply of gas in some areas, helping to drive up prices.

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But the deadline for refineries to switch to summer blends is Friday, and AAA said gasoline production should soon revert to normal levels.

“Following the transition to summer-blend gasoline and as refineries complete seasonal maintenance, the national average may return to below $2.50 per gallon, though much of the forecast will depend on what happens with the cost of crude oil,” AAA said in a release.

U.S. oil was trading at around $59 a barrel Thursday, $2 higher than a week ago and nearly $11 higher than a month ago. A $10 increase in the price of oil translates into roughly a 25-cent increase in pump prices, though there is a delay of a week or two before consumers feel the impact.

But oil is still significantly cheaper than a year ago, and the U.S. Energy Information Administration forecasts that it will remain much lower than last summer, when oil was $100 or more per barrel. The EIA projects regular gas will average $2.45 per gallon this summer, compared to $3.59 during the summer of 2014. Average summer prices were $3.58 in 2013, $3.70 in 2012 and $3.71 in 2011.

For 2015 as a whole, the EIA projects that regular gas will average $2.40 and that the average U.S. household will spend about $700 less on gasoline compared with 2014. Annual motor fuel expenditures are on track to fall to their lowest level in 11 years, the EIA said in its most recent forecast.

Even so, many Americans think they’re still paying too much for gas.  In a AAA telephone survey, only 17 percent said gas is “cheap” at $2.50 a gallon and 39 percent said it is “too high.”

When does gas become “cheap”? In the survey, 43 percent said when it hits $2 a gallon and 58 percent said not until it falls to $1.50.

Meanwhile, though, pump prices continued to climb by double digits in several areas the past week, and AAA reported that Californians suffered the most. The average price for regular soared 34 cents in California to $3.53 as the supply of gas continued to be limited by refinery issues.

Average prices rose 11 cents in Oregon and Utah, and 19 cents in Nevada, where the statewide average was $3.04 Thursday, the first time above $3 since November. Alaska, at $3.07, and Hawaii, $3.13, joined Nevada and California in the over-$3 category.

The least expensive gas was in South Carolina, where regular averaged $2.31, followed by Missouri and Oklahoma at $2.34.

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