Gasoline futures prices were ready to close at their highest price in more than a month on Tuesday (Aug. 27), buoyed by strength in oil prices on the back of risks tied to Syria. And with the U.S. Labor Day holiday, the rally in the futures market may be a threat to prices at the pump, according to AAA.
MarketWatch reported that on Tuesday afternoon, September gasoline added nearly 9 cents, or 2.9%, to $3.04 a gallon on the New York Mercantile Exchange. That would be the highest settlement for a most-active contract since July 23, according to FactSet data.
The oil market is weighing the increased possibility of U.S. strikes in Syria and “motorists in the U.S. may pay higher gas prices in the days ahead if this sentiment continues,” said Michael Green, a spokesman for AAA said on Tuesday.
“The potential risk could break the recent trend of very stable prices at the pump,” he said. “Higher futures prices do not always translate to higher pump prices, but it should be a concern for motorists with Labor Day approaching.”
The average national price for a gallon of regular gasoline stood at $3.54 on Tuesday. Prices are already on track to be the fourth most expensive on record for the Labor Day holiday on Monday, according to AAA. The most expensive Labor Day average was $3.83 a gallon in 2012.
National average gasoline prices have been “unusually” stable, holding at $3.54 for 13 of the previous 15 days, Green said. They have declined 30 out of the previous 39 days for a total of 13 cents a gallon, “which is a very slow rate of decline,” he said.
“Motorists would be paying even less for gasoline today if not for the very expensive price of crude oil,” said Green. “Domestic West Texas Intermediate crude has closed above $100 per barrel every day since July 3, which is the same day the military took control of Egypt.”
The average U.S. price of a gallon of gasoline has fallen about 8 cents over the past two weeks.
The Lundberg Survey of gas prices released Sunday (Aug. 11) says the price of a gallon of regular is $3.60. Midgrade costs an average of $3.78 a gallon, and premium is $3.92.
Lundberg Survey President Trilby Lundberg says refiners are over-producing gasoline and slashing their wholesale prices to move product.
Of the cities surveyed in the Lower 48 states, Charleston, S.C., has the nation’s lowest average price for regular gasoline at $3.27 a gallon. Chicago and San Diego have the highest average price at $3.92.
The lowest average price in California is $3.72 in Sacramento. The average statewide for a gallon of regular is $3.86, down 11 cents from two weeks ago.
As we head into the dog days of summer, gas prices have once again become a real pain. Examiner.com reported that according to AAA, a gallon of regular unleaded has increased 14 cents versus a week ago as the national average is $3.61, up from $3.47 a week ago.
It could mean a repeat of last year’s seasonal ramp-up, which spiked around Labor Day, but that’s a newish trend. Between the first week of July and the first week of September, a gallon of regular unleaded soared 49 cents in 2012, but just 9 cents in 2011, according to historical data from the federal government’s Energy Information Administration. In 2008, 2009 and 2010, gas fell during that span.
Gas prices are also 22 cents higher than a year ago at this time.
Why this year’s rise? Business Insider explains that gas prices track with those of Brent crude oil, which has gained 7% since late June on political unrest in Egypt and production outages in Libya.
And CNBC reports that U.S. refinery outages along the Gulf Coast, the Midwest, the East Coast and Canada have exacerbated the problems. Brent prices have leveled off in the past couple days, but it remains to be seen whether they will return to June levels.
If cheap gas is considered as patriotic as draping Old Glory in the back window of your pickup truck, the news from the government’s oil price watchers couldn’t come at a better time.
USA Today reported that the price of regular-grade gasoline has fallen below $3.50 a gallon on average nationally just in time for the Fourth of July weekend in the weekly survey by the Energy Information Administration (EIA) reports.
And it wasn’t just a tiny price drop. A gallon of regular fell eight cents during the week from $3.577 to $3.496. That’s unusual, given not only that the four-day holiday weekend is coming up, but also because the nation is entering the heart of the summer vacation driving season.
Among regions, the cheapest gas can still be found, as usual, on the refinery-rich Gulf Coast. There, it averaged $3.312 a gallon, down from $3.377 a gallon.
And the priciest? In California, the country’s driving Mecca, gas still tops an average of $4 a gallon — but just barely. It’s $4.002 in the survey. On the West Coast in general, including California, gas averages $3.892.
Drivers will find this summer’s gas prices are lower than last year’s, the result of a spike in crude oil production. NPR reported that government forecasters say a gallon of regular gasoline will cost about $3.50 this summer — a slide of more than 10 cents from last year.
Energy Department analysts say “the regular gasoline price will average $3.53 per gallon over the summer,” citing lower crude oil prices. “The annual average regular gasoline retail price is projected to decline from $3.63 per gallon in 2012 to $3.50 per gallon in 2013 and to $3.39 per gallon in 2014.”
Increased U.S. petroleum exports could keep domestic prices from taking a sharp dive, despite a slight slump in demand.
According to NPR, “U.S. refineries are also exporting a record amount of diesel and gasoline to developing countries, including China, where demand for diesel is through the roof.”
Oil industry analyst Patrick DeHaan said that if gas companies “build domestic inventories too much, it will hurt their bottom line. Maintaining exports while not allowing inventories to grow out of control, is what they’re likely trying to accomplish.”
Last Memorial Day, the U.S. average for a gallon of unleaded was $3.636 — “down about 15 cents” from 2011, CNN reported. But prices rose at the end of the summer, due in large part to Hurricane Isaac.
The International Monetary Fund recently urged governments to cut subsidies and allow higher gasoline prices, seeing it as a way to encompass the costs of increased traffic, pollution and global warming, in addition to exploration, production and transportation.
As David Wessel, economics editor of The Wall Street Journal, told NPR’s Linda Wertheimer on Morning Edition, the IMF “says that subsidizing energy or mispricing it aggravates budget deficits, crowds out spending on health and education, discourages investment in energy, encourages excessive energy use, artificially promotes capital-intensive industries,” and creates other problems.
“Some governments spend more on energy subsidies than they do on education and healthcare,” Wessel said. “And nobody really thinks that’s a great idea.”
But, he added, “David Lipton, the No. 2 at the IMF …. says it’s better to do this the right way than to do it right away, but it’s important to do it.”
A new survey from AAA says consumers’ attitudes about gas prices and driving behavior begins to change once gas prices near $3.50 a gallon.
Cincinnati.com reported that half of more than 1,000 U.S. adults told AAA prices are too high when they reach $3.44 a gallon. Nearly two-thirds of Americans told the travel club that they are coping with higher gasoline prices by changing their driving habits or lifestyles. Data from AAA’s consumer price index were released Tuesday (April 23).
Ninety percent of drivers believe prices are too high when they reach $4 a gallon. Less than five years ago, the national average for regular gasoline was $4 a gallon, but residents of large cities including Chicago have had to deal with that mark for long stretches of time since then.
“It is possible there is a new normal in terms of consumer attitudes now that gas prices have remained above $3 per gallon for more than two years,” said AAA President and Chief Executive Officer Robert Darbelnet.
The average price in Northern Kentucky has been above $3.44 for 84 days, or 75% of the time, this year. In Southwest Ohio, prices were above that level for 74 days, or 66% of the time.
If that sounds bad, it is actually better than last year. In 2012, the average price in Northern Kentucky was higher than the $3.44 mark 86% of the time, while it was higher 71% of the time in Southwest Ohio.
The most common way — at 86% — adults surveyed said they coped with higher gas prices was driving less. A majority of adults also said they reduced shopping or dining out, drove a more fuel efficient car or delayed major purchases.
Public transportation agencies often identify higher gasoline prices as a development that helps boost ridership in many locales, but only 15% of people surveyed said they used the service more frequently when prices rise. Young adults more apt to coping work closer to home or use public transit than adults age 35 and older.
Here’s a spring break we can all enjoy: lower gas prices.
USA Today reported that at a time when gas prices traditionally rise, they continue to slide, even as the nation heads into peak summer driving season.
Nationally, prices now average $3.61 a gallon. That’s a 12-cent drop from early March and 33 cents below $3.94 a year ago, when prices were close to a 2012 peak. And despite record-high averages in February, motorists paid an average $3.54 a gallon in the first quarter, vs. $3.58 in the first quarter of 2012.
Consumers in some regions of the Rocky Mountains — close to relatively cheap North American crude oil near refiners — are filling up on sub-$3-a-gallon gas. In Montana, which averages $3.37 a gallon, prices in some cities, such as Great Falls, are in the $2.90s. Casper and Cheyenne, Wyo., had average prices below $3 for the entire quarter.
“We’ll probably see more markets with $3-a-gallon gas next week,” says Tom Kloza, chief oil analyst at the Oil Price Information Service and GasBuddy. Among the likely areas: South Carolina, Tennessee and Georgia.
GasBuddy analyst Patrick DeHaan estimates that each penny per gallon saved means savings of about $108 million a day over year-ago prices. The price-tracking Internet app tracks prices at more than 140,000 gas stations.
Crude oil prices continue to slide. Benchmark West Texas Intermediate crude fell to a two-week low of $92.70 a barrel Friday, ending the week down nearly 5%. Meanwhile, the Energy Information Administration says U.S. inventories were at a 22-year high last week.
Still, prices at the pump could be prone to spikes — as they did last year when refinery disruptions caused supply issues in California and the Midwest. But DeHaan and Kloza expect continued price weakness for the next few weeks.
“The coast is not yet clear for a 2013 top, but it was always nonsense to suggest that prices might vary from $4.25 to $5 a gallon,” Kloza says. “That won’t happen unless there is a disruption in the Mideast.”
And despite the year-over-year price drop, there is still pain at the pump, based on historical trends. During 2009’s first quarter, gas averaged less than $1.90 a gallon and averaged less than $1.60 a gallon in the first quarter of 2003.
Highest current prices in the continental U.S.: California, averaging $4.03, vs. $4.28 a year ago. Price ranges in some markets have never been wider. GasBuddy says drivers in Washington, D.C., can save $1.14 a gallon shopping for the cheapest price available.
Gasoline prices that soared in early 2013 gave way to a rare March decline – one that could lower the temperature of political fights over energy.
According to the Hill, AAA reported Monday (April 1) that national average prices fell during March for the first time in 10 years, and current prices are almost 30 cents per gallon less than a year ago.
“The national average should remain less expensive than last spring,” the travel services group said in its analysis.
Prices currently average $3.63-per-gallon. The decline of 15 cents per gallon last month was the first March decline since 2003, AAA said in its monthly report.
“It is very unusual for gas prices to decline in early spring like we have seen this year,” AAA spokesman Avery Ash said. “An increase in refinery production and lower oil prices in early March have combined to provide rare falling prices for motorists in comparison to recent years.”
Drivers’ costs have been on a roller-coaster. Prices soared 49 cents per gallon between the beginning 2013 and the end of February, which was the highest increase through the end of February on record, according to AAA.
AAA is offering no assurances that prices won’t tick back up, but does not expect them to reach 2012 levels. “AAA has no record of gas prices ever peaking in February, and it is too early to say whether prices may have hit a high for the first half of the year,” Ash said.
“While it is possible that gas prices may surge briefly again this spring, the national average should remain less than last year’s high of $3.94 per gallon. Yet even with the recent declines, we cannot lose track of the fact that gasoline remains very expensive for many American motorists,” he said.
U.S. gasoline prices have declined for four weeks straight and now average more than 20 cents a gallon cheaper than a year ago, according to a new nationwide survey.
CNN reported that the average cost of a gallon across the continental United States of regular stands at $3.71, down 3 cents from two weeks earlier, said Trilby Lundberg, publisher of the Lundberg Survey. Prices have fallen nearly 9 cents a gallon in the past four weeks and are 22 cents cheaper than at this point in 2012, Lundberg said.
Lower prices in the Europe’s benchmark Brent crude oil are largely behind the most recent fall. More U.S. refining capacity coming back on line after seasonal maintenance also contributed, Lundberg said.
“From there, short-term, we may see more price-cutting soon, perhaps on the order of this approximate 3-cent decline,” she said. “But the current picture suggests it won’t be large.”
Gas prices broke a three-month upward spiral in early March, which had climbed nearly 54 cents since late December.
The Lundberg Survey canvasses about 2,500 filling stations across the Lower 48 states every two weeks. The most expensive fuel in the latest survey, conducted Friday (March 22), was in Chicago, where pump prices averaged $4.10 a gallon; the cheapest could be found in Billings, Montana, at $3.33, Lundberg said.
Congress is warning gas prices — already on the upswing, these past few weeks — could go even higher, given an Environmental Protection Agency (EPA) mandate on renewable fuels that’s about to take effect.
Refiners are paying much more for corn ethanol credits that are used to meet EPA standards on renewable fuels, Politico reports. Refiners used to pay a few cents per gallon; now, they pay more than $1 a gallon. That means refiners could pay an additional $7 billion before the end of the year — and consumers may end up helping out with costs.
“We’re just in the middle of a tornado trying to figure out what to do,” said Stephen Brown, vice president for federal and government affairs at the refining company, Tesoro, in the Politico report. “But we can all agree this is not a good thing for consumers.”
To counter growing costs, refiners can boost gasoline exports, decrease how much gas they refine — or stick it to buyers.
“I suspect a combination of all three things [are] happening with refiners,” said Bill Day, a spokesman for U.S. refiner Valero, in the Politico report.
Meanwhile, congressional energy committee members are looking for solutions. One House Energy and Commerce Committee aide said that members will be holding hearings on the EPA mandate on renewable fuels, but they have yet to set a date.
U.S. consumers facing the highest gasoline pump prices ever for February may see further increases as global crude oil futures climb and breakdowns and seasonal maintenance at refineries reduce fuel supplies.
Bloomberg reported that prices at the pump are up 14% this year and have risen 33 straight days, according to AAA data. Brent crude in London, the pricing basis for gasoline imports and for oil used by coastal refiners, advanced to a nine-month high Feb. 8.
Unit breakdowns and seasonal repairs reduced refinery processing by 8.3% since mid-December, cutting fuel production, Energy Information Administration data show. Regular gasoline has jumped 45.6 cents this year, the fastest increase in AAA data back to 2005. Prices may peak earlier than they did last year, according to Avery Ash, a spokesman for AAA, the nation’s largest motoring organization.
“What’s driving the price up is the fear we might not have enough supply,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “It’s a national concern.”
The average nationwide pump price gained 1.8 cents to $3.748 a gallon, 19.2 cents higher than a year ago, AAA said on its website today. In 2008, when prices reached an all-time high of $4.114, regular gasoline cost $3.032 on Feb. 18.
A combination of high crude prices, refinery shutdowns and early speculation has sent gas prices soaring to seasonal highs earlier than usual this year, with no signs of prices at the pump falling until spring, according to recent estimates.
The Christian Science Monitor reported that gas prices have climbed every day for the past 25 days, reaching a national average of $3.59 per gallon Monday, the most expensive national average ever for Feb. 11, according to AAA.
During just the past two weeks, average prices have climbed almost 25 cents, the biggest jump in gas prices in almost a year.
This is a very early rise,” says Tom Kloza, chief oil analyst at the Oil Price Information Service. “January has tended to be a quiet month through the years, but the rally really began in earnest around Jan. 15.”
Gas prices tend to increase in late February as refineries shut down for maintenance ahead of the busy summer driving season.
There are three reasons for the spike, say analysts.
Higher crude prices. This rise, especially overseas, has pushed up prices at the pump, says Michael Green, a spokesman at AAA.
“This year oil prices are rising with expectations that the global economy will continue to improve,” said Green. “Gas prices are intimately connected to oil prices, [which are] very much connected to what is going on in other parts of the world. Events overseas have a big effect on prices American motorists pay at the pump.”
In fact, crude oil prices have risen 10 percent during the past two months, and the price of crude accounts for almost 70% of the cost of a gallon of gas, according to the US Energy Information Administration.
Seasonal changes. Refineries usually shut down for maintenance in late winter, temporarily reducing gas supplies. As per federal requirements, refineries also begin transitioning at this time of year to summer blend gasoline – a more environmentally-friendly, and expensive, blend to produce. This reduces current winter blend gas supplies.
Financial market speculation. In addition, the rally has been driven by earlier-than-usual speculation that demand for oil will rise, further inflating prices, said Kloza. In a recent Commodity Futures Trading Commission report, Kloza said he calculated that there is about $45 billion more bet on higher petroleum futures than on lower ones. In other words, more traders expect oil prices to rise in the future than to fall, an expectation that causes oil producers to horde oil in the hopes they can sell it at higher prices later on. That dries up current supplies and translates to higher prices at the pump, which Kloza says we’re already seeing.
Gas prices have been on the rise for weeks, and they’re set to spike in the months ahead. Does this sound at all familiar?
According to a Time.com report, thus far in 2013, drivers have been paying less for gas, on average, than they were a year ago. During the first week of January, for instance, the national average was $3.30 per gallon, or 7 cents less than it was 12 months beforehand. But prices are rising, and the difference between current prices and 2012 counterparts is shrinking. Lately, according to AAA’s Fuel Gauge Report, the average gallon costs $3.42 nationally, compared to $3.45 a year ago.
USA Today reports that prices have risen by 20 cents or more in recent weeks in several Midwest states, and that prices in California are expected to spike soon to over $4 per gallon, up from around $3.75 currently.
So is it time to panic? Nah. More likely, the reaction of drivers is more along the lines of, “Oh well, here we go again. What’re you gonna do?”
And also: “Hey, prices are still cheaper than they were a little while ago.” The average price per gallon was $4.67 in California as recently as October, and many stations in the state were charging more than $5. After facing the most expensive year ever for gas in 2012, drivers have heard that prices are supposed to be cheaper in 2013.
Oil Price Information Services’ Robert Gough told the Des Moine Register, “Gasoline prices averaged $3.60 per gallon last year, and we think they’ll average between $3.25 and $3.50 per gallon this year.” The U.S. Department of Energy, meanwhile, has predicted an average of $3.44 per gallon this year, and $3.34 for 2014.
In the grand scheme, a short-term seasonal surge in gas prices probably isn’t enough to make drivers bat an eye. We’ve been hearing about the likelihood of dramatically higher gas prices for decades, and we’ve been living through periodic price spikes at least since the summer of 2008—which was followed by sharp hikes in springtimes of 2011 and 2012. New-car MPG ratings have risen accordingly, as drivers increasingly opt for more fuel-efficient vehicles and federal guidelines force automakers to steer away from the gas-guzzling vehicles of the past.
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At least gasoline should cost you less in 2013.
Hamburger, health care and taxes are all set to take a bigger bite out of the family budget this year. But drivers’ annual gas bills are expected to drop for the first time in four years.
Forecasters say ample oil supplies and weak U.S. demand will keep a lid on prices. The lows will be lower and the highs won’t be so high compared with a year ago. The average price of a gallon of gasoline will fall 5 percent to $3.44, according to the Energy Department.
“Everything is lining up to lead to softer prices this year,” said Tom Kloza, chief oil analyst at the Oil Price Information Service.
That would still be the third-highest average price ever. But a discount of 19 cents per gallon from 2012 would save the typical household $205 this year and free up $25 billion that could go instead to restaurants, malls or movie theaters — the kind of consumer spending that accounts for 70% of American economic activity.
“It’s a little benefit to the economy, and it’s a little more reason the Fed doesn’t have to worry about inflation,” said James Hamilton, an economist at the University of California at San Diego who studies energy prices.
Forecasters caution that they can’t predict other factors like Middle East tensions, refinery problems or hurricanes along the U.S. Gulf Coast — in other words, the same events that caused gasoline prices to spike in 2011 and 2012. Any or all of those troubles could crop up again in 2013 and push pump prices above last year’s record average of $3.63 a gallon.
According to an Associated Press report, the government expected gas to average about $3 during 2011. Then came the Arab Spring, which included the shutdown of Libya’s oil production. Oil prices shot up, and gasoline averaged $3.53 for the year. The government’s forecast for last year also turned out to be too low, by 18 cents per gallon.
And, Hamilton said, consumer spending might not see a boost from lower gasoline prices because most Americans will be paying higher taxes. The expiration of last year’s payroll tax reduction will cost an extra $579 for households making $40,000 to $50,000 in 2013, according to the Tax Policy Center, a non-partisan Washington research group.
But after average gas prices rose in 2010, 2011, and 2012, a little relief will be welcome in 2013.
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The average price of a gallon of regular gasoline in the U.S. this year never reached the highs seen in 2008, when the all-time record of $4.114 was reached. The 2012 average never even climbed as high as it was last year, when it hit $3.965, according to the Energy Department.
But fuel prices have been so consistently high in 2012 that American motorists are on pace to spend more on gasoline this year — $483 billion, or $1.32 billion a day — than they ever have before, according to the Oil Price Information Service (OPIS) in New Jersey, the Los Angeles Times reported.
That would break the old record for the amount of money spent by Americans on gasoline, set last year, by about $12 billion. That’s in spite of the fact that the U.S. average topped out this year at $3.941 a gallon back in April.
Analysts say the most remarkable thing is that high gasoline prices didn’t have the chilling effect on consumer spending that they did four years ago.
“Americans seem to have accepted the news on high fuel prices with aplomb,” said Tom Kloza, chief oil analyst for OPIS.
Gasoline prices this year were driven, in part, by high oil prices. They were also affected by consistently high exports of U.S.-produced diesel and gasoline to customers overseas.
A third factor involved periodic regional spikes that helped keep the national average high.
Three Spikes in 2012
The first of those spikes occurred in the Midwest, where petroleum pipeline ruptures and refinery outages kicked prices sharply higher.
The second occurred in October in California, where prices hit a new state record of $4.671 a gallon, sparking several calls for federal and state investigations of refinery practices.
More recently, damage from Hurricane Sandy along the Eastern Seaboard shut down several refineries and led to temporary fuel rationing in New York and New Jersey.
These impacts canceled out the fact that U.S. demand for motor fuel, running at around 8.7 million barrels a day so far this year, is at its lowest level since 2001, Kloza said.
The U.S. Energy Department said earlier this year that the average price for a gallon of regular gasoline was running at about $3.64 in 2012, up from last year’s record average of $3.53.
There is some good news. Fuel prices are expected to average about $3.44 a gallon in 2013, the Energy Department projects.