You may be paying more than ever for a late-summer drive.
U.S. drivers are paying an average of $3.72 per gallon today (Aug. 20), The Associated Press reported. That’s the highest price ever on this date, according to auto club AAA, a shade above the $3.717 average on Aug. 20, 2008. A year ago, the average was $3.578.
More daily highs are likely over the next few weeks. The national average could increase to $3.75 per gallon by Labor Day, said Tom Kloza, chief oil analyst at Oil Price Information Service. By comparison, gas prices stayed below $3.70 in late August and early September in both 2008 and 2011. Kloza and other analysts expect prices to start dropping after Labor Day, barring a hurricane or other unforeseen event.
Retail gasoline prices have risen nearly 12% since July 1 because of higher oil prices, and problems with refineries and pipelines that created temporary supply shortages in some regions. An increase in the price of ethanol, which is blended into gasoline, also contributed to the rise in pump prices.
The pace of the increases has slowed considerably, however. Gas rose 19 cents in the two weeks ended Wednesday. It’s up just 1 penny in the five days since. Gas costs about 26 cents more than a month ago and 14 cents more than a year ago, according to AAA, OPIS and Wright Express.
A few drivers are catching a break. Retail prices were lower than this date in 2011 in four states — Montana, Wyoming, Utah and Idaho, said Kloza.
Like summer temperatures, gasoline prices show few signs of cooling off.
According to a report by USA Today, after dipping to $3.33 a gallon and flirting with $3 in the South, the nation’s average gas price climbed 17 cents over 26 consecutive days in July. It was the first monthly gain since March and the biggest July jump since at least 2000, AAA said Tuesday (July 31).
Nationally, regular gasoline now averages $3.50 a gallon, although it’s pricier in 25 states.
“More and more locations say prices are above where they were last year — and last year was the most expensive for motor fuel,” says Oil Price Information Service analyst Tom Kloza. Gas averaged $3.71 a gallon in July 2011.
The Midwest is particularly pinched. Refinery woes in Indiana and Illinois have crimped output, propelling prices to as high as $4.29 a gallon in Chicago and to near $4 levels in several regions of the Rust Belt.
“It’s been pretty lousy,” says Patrick DeHaan, senior energy analyst for price tracker gasbuddy.com. “In some states, there’s been a 40- to 50-cent increase.”
Hawaii has the nation’s highest average gas price at $4.15 a gallon, followed by Alaska at $4 and Connecticut at $3.82.
The three states with the lowest prices are in the South: South Carolina at $3.20, Mississippi at $3.24 and Alabama at $3.25. State taxes, which can tack on up to 42 cents a gallon, explain part of the difference.
Nationally, prices have climbed in tandem with crude oil. Although benchmark West Texas crude lost 2% Tuesday, it was up about 3% for July — the first monthly gain since April. Much of that came on speculation that Europe’s debt crisis would finally be resolved and hope that the Federal Reserve would launch new measures to stimulate the U.S. economy, DeHaan says.
August prices are likely to climb to a national average of about $3.60 before pulling back after Labor Day, says Kloza, who still expects gas to slip to $3 a gallon by November as seasonal demand slips.
The month-long slide in gasoline prices likely will continue in the coming weeks, providing more relief for shell-shocked motorists heading into peak driving season.
USA Today reported that nationally, gasoline averages were $3.80 a gallon — about 12 cents below this year’s peak and nearly 20 cents below 2011’s $3.99 a gallon. Gasoline prices have now fallen 18 straight days and 25 of the past 28.
“We can expect the U.S. retail average to flirt with $3.75 a gallon shortly and expect to pay 10 to 25 cents a gallon less in the next couple months,” says Tom Kloza, chief analyst for the Oil Price Information Service.
Crude oil prices fell sharply in early Friday (May 4) trading after the Labor Department reported weaker than expected job gains last month. That roiled Wall Street and the commodities market. Benchmark West Texas crude oil sank 4% to $98.52 a barrel, its biggest one-day drop of 2012 and the first time crude had fallen below $100 since February.
Weaker-than-expected economic news in the U.S. and Europe has helped push prices lower for several weeks. So have supply problems at U.S. refineries and easing tensions in the Middle East, where a possible showdown with Iran had driven speculators to push crude oil prices up sharply since the start of the year, spurring some forecasters to predict gasoline would surge well above the record $4.11 a gallon average set in July 2008.
But with consumption down, sustained global economic weakness and rising production up — the Energy Department said earlier this week that U.S. production was at its highest levels since 1999 — this year’s price run-up ran out of steam six weeks before the peak of summer driving season.
Lowest prices: the Midwest, where gas could fall below $3.50 a gallon. Highest: the West coast, where prices could remain closer to $4 as supplies are tight .
Gasoline is tumbling to an eight- month low as reduced U.S. growth causes pump prices to follow crude oil’s decline after lagging behind since April.
Prices may drop 20 cents to $3.19 a gallon by early November, according to the median estimate of eight analysts in a survey by Bloomberg News. Gasoline has fallen 15% from this year’s high of $3.985 on May 4, according to Heathrow, Florida-based AAA, the largest U.S. motoring organization. West Texas Intermediate oil, the most-traded U.S. crude grade, retreated about 30% over the same period.
“The worry that the economy could slip back into a recession is putting pressure on oil prices, and prices at the pump are coming off,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, an oil-industry researcher and former trader for Vitol Group, the world’s biggest independent oil trader, said in a telephone interview on Oct. 4.
Oil Prices Crude oil for November delivery traded today as low as $81.79 on the New York Mercantile Exchange, down from its 2011 peak of $113.93 reached on April 29. Pump prices have dropped to $3.39 a gallon from the high in May, according to AAA data.
“Gasoline prices are going to bottom out pretty soon and it will be supply-driven,” Sander Cohan, an analyst with Energy Security Analysis Inc. in Wakefield, Massachusetts, a global energy-forecasting and consulting firm, said by phone on Oct. 5.
“Everybody knows demand is pretty awful and there’s shutdowns for economic reasons like Trainer and I think you will see a lot of quiet shutdowns where maintenance is dragged on for months.”
Editor’s Note: This post by David Schepp originally appeared on March 29 on DailyFinance.com.
With average U.S. gas prices hovering at historic highs, plenty of Americans are anxious about the cost of filling up. Analysts blame the recent steady rise in oil prices on unease about the Middle East and anticipation of increased global demand as the world economy continues to recover from the recession.
According to AAA’s Daily Fuel Gauge Report on Tuesday (March 28), the nationwide average for self-serve unleaded regular gasoline was $3.59 a gallon. That’s about 80 cents a gallon more than a year ago and 30 cents a gallon higher than on the same day in 2008, when gasoline prices were rising toward their all-time record high of $4.11 a gallon, which they hit four months later.
Despite the pain Americans are feeling at the pump, we still pay much less than the drivers in many other developed nations in the world. Canadians, for example, pay about a third more than U.S. consumers, even though Canada is the biggest foreign supplier of oil to the U.S.
According to a survey this month of worldwide gasoline prices by AIRINC, a Cambridge, Mass.-based consulting firm, the price per gallon in Toronto averaged $4.96 for regular grade fuel, while in New York City, prices at the pump averaged $3.82.
Even Canadian prices are bargains compared to those in several European nations, as well as some in Africa and Asia. Among the nations with the highest gas prices: Turkey, Eritrea and Norway. Residents of Istanbul pay the equivalent of $9.63 a gallon, according to AIRINC’s survey, while those in Eritrea’s capital, Asmara, and Oslo aren’t far behind with per-gallon prices of $9.59 and $9.27, respectively.
Greece, Denmark, Sweden, Belgium, the United Kingdom and the Netherlands are also among countries with some of the world’s highest gasoline prices, with drivers paying at least $8 a gallon.
Still, it isn’t likely that many U.S. consumers will take much solace in knowing that they spend far less on gasoline than their counterparts elsewhere.
“I doubt many Americans are concerned about what others are paying overseas or outside of the United States,” says AAA spokesman Troy Green. That’s especially true for those living paycheck to paycheck, or on fixed incomes, or who have been unemployed long term, he says. “When you look at those three groups, it’s really tough on them right now.”
Despite ample supplies of crude oil, prices have risen steadily since last summer. Civil unrest in the Middle East is one reason some traders have been bidding up the price of oil. On Tuesday, crude prices remained above $104 a barrel in trading on the New York Mercantile Exchange.
Yet while gas prices in the U.S. and many other countries continue to rise, prices in Libya, which has been the scene of some of the region’s bloodiest chaos recently, have remained relatively stable at around 54 cents a gallon, according to AIRINC spokesman Scott Sutton. Libya, like many of its fellow OPEC nations, has among of the lowest gas prices in the world, thanks to government subsidies.
Sutton noted, however, that amid the current upheaval in their country, many Libyans are too fearful to fill up for fear of being shot. Other countries where gas prices remain at bargain-basement levels include Venezuela, Saudi Arabia, Turkmenistan, Bahrain, Kuwait and Qatar. In cities in each of those countries, pump prices were well below $1 a gallon, according to AIRINC’s survey. In the Venezuela capital of Caracas, heavily subsidized gasoline was selling for a mere 6 cents a gallon.
Whether gas prices in the U.S. will head lower or creep even higher in coming weeks in advance of the summer driving season remains unknown. After prices hit record highs in the summer of 2008, few analysts predicted that they would rapidly plummet to their lowest levels in years — but they fell to a national average of $1.62 a gallon on Dec. 30, 2008, according to AAA.
“It’s a foolhardy practice to try to predict long term what gasoline prices are going to be with a measure of accuracy,” says the AAA’s Green. “You just don’t know.”
Americans could see gasoline pump prices spiking 10% to 18% higher in coming weeks as a result of the unrest in the Middle East — but they’re unlikely go above $4 a gallon — unless the uprisings spread to Saudi Arabia, AOL’s Daily Finance reported.
“We’re going to see gasoline prices going higher in the next week, the next months and maybe in the next six weeks,” says Tom Kloza, chief oil analyst at Wall, N.J.-based Oil Price Information Service. He forecasts a price in the range of $3.50 to $3.75 a gallon, up from the current $3.17 for a gallon of unleaded regular gas.
However, Kloza says he “disagrees vehemently” with analyst predictions that gas prices could shoot above $4 or even $5 a gallon. CNBC Tuesday (Feb. 22) quoted traders as saying gas prices could surpass $4 a gallon, and USA Today ran a front-page story saying that $5 a gallon gas “isn’t out of the question.”
One Giant Caveat
Kloza cites a good reason for why that seems unlikely: About 5.5 million barrels of excess capacity of crude oil are now available to drive prices down, of which the Saudis control 4.5 million barrels. And the Saudi oil minister rushed to assure the world on Tuesday that OPEC stood ready to raise output.
“Needless to say, everything is pure garbage if we wake up one of these days and we see there are riots in the streets of Saudi Arabia, or the royal family there is about to be overthrown,” Kloza says.
Michael Lynch, president of Winchester, Mass.-based Strategic Energy & Economic Research, adds that increased Russian and Canadian production has helped boost world supplies as the crisis in the Mideast spreads. “Generally speaking, there has been a pretty good performance from non-OPEC producers, and I think that will continue,” Lynch says.
Libya exports around 1.5 million barrels a day and has Africa’s largest proven oil reserves. While it’s an OPEC member, its effect on U.S. oil prices is limited because most of its output goes to European customers.
Deep-Seated Religious Conflict
A greater problem might be Bahrain, where deadly clashes have been ongoing for the last week. Although the island state has no oil of its own, it lies across a causeway right next to Saudi Arabia’s oil-producing eastern province. Like that Saudi province, Bahrain has a large Shia Muslim population, but the country has been ruled by a Sunni monarchy. That religious conflict — more than 1,000 years old — is behind the violence in Bahrain and could threaten stability in Saudi Arabia. Of course, that would be far more explosive for the U.S. than the current chaos in Libya.
Lynch says another major concern is Iran. If pro-democracy violence escalates there, it could seriously hurt that country’s exports, and the uprising potentially could spread to Saudi Arabia. “If Iran catches a cold, everyone worries about Saudi Arabia getting pneumonia,” he says.
Kloza notes that as bad as the Libyan tragedy is, similar chaos has afflicted Nigeria for many months, yet oil has continued to flow to the U.S. without letup. One big difference, though, is that foreign oil workers have been evacuated from Libya, while they have largely remained in Nigeria.
Kloza says for gasoline to get above $4 a gallon, crude would have to rise above $125 a barrel. It’s now around $106 for Brent crude, the European standard. “That couldn’t be sustained for weeks and months as it was in 2008, when the trading community lost their heads,” he says.
Why Brent Crude Prices Are Key
Kloza says consumers should focus more on the Brent crude price than the often-quoted gyrations of the U.S. benchmark, West Texas Intermediate (WTI). Although WTI is the focus of most financial transactions involving oil, Brent crude is a better price gauge because it more accurately reflects world oil demand, he says.
“The last thing you should do in the morning is wake up and hear that the price of WTI is up $5 or down $5 and assume that’s what everything else is doing in the oil patch,” Kloza says. In fact, WTI spiked $8 a barrel Tuesday, sending stocks sharply lower before retreating a bit, to close up $7.37.
The difference between Brent and WTI is around $7 to $10 a barrel, but it has been as high as $19. Still, the price of crude is nowhere yet near the level it would have to go before Americans find themselves shelling out $5 a gallon at the pump. With luck, it’ll stay that way.
It’s been such a steady climb that gasoline prices have reached the highest levels since 2008, when they broke $4 per gallon in many U.S. cities, with little fanfare, the Chicago Tribune reported.
The national average retail price for regular-grade gasoline broke through the $3-a-gallon mark around New Year’s and climbed about 4.5%, to $3.14, by Valentine’s Day, according to data from the federal Energy Information Administration (EIA).
“Prices crept up like 20 cents in a few months, but it’s been a very quiet thing,” said Michael Lynch, president of energy consulting firm Strategic Energy & Economic Research. Quiet, but still in the forefront. After all, the numbers are posted on huge signs at most every busy intersection, Green said, and are widely available on the Internet.
“If they posted the price of bread or milk in big numbers, you might get upset when they rose too,” he said. Particularly because, like bread and milk, gas figures into most consumers’ everyday lives, with no alternatives, Green said.
“And there’s a visceral reaction when prices reach a milestone, like $3 a gallon and other round-number prices,” he said. “A lot of it is psychological.”
Still, for high-mileage drivers on a tight budget, gas price increases have a real impact.
“The more people have to pay for gasoline, the less they’re going to spend in other areas,” Green said. That has an effect not only at the household level but also for the U.S. economy, two-thirds of which depends on consumer spending, he said.
Prices are up 50 cents per gallon from a year ago, which translates into an extra $300 in annual gasoline costs if driving 15,000 miles in a vehicle that gets 25 mpg.
And they aren’t likely to go down anytime soon.
“We see prices continuing to increase through the spring and summer,” said EIA economist Neil Gamson. “We don’t see prices under $3 for the next two years.”
Though they aren’t likely to spike, either, not like 2008, when price jumps of 20 cents per month were common. The EIA sees only a 1-in-10 chance of gas returning to $4 a gallon this summer.
Lynch agrees. “I don’t think we’ll see $3.50 or $4 this year or next. And $5 is a little crazy.”
Still, conditions are ripe for higher prices: Demand for crude oil, the main component for gasoline, is rising in large, quickly developing countries such as China, India and Brazil, Gamson said. In China, for example, oil consumption has risen to 8.2 million barrels per day in 2009 from 1.7 million in 1980, according to data from the EIA and the CIA.
Even the U.S. appetite for oil is returning as the economy picks up, Gamson said.
Weather was cited for price spikes earlier in the winter, as low temperatures drove increased demand for home heating oil, another crude derivative, in the Northeast and Europe, he said.
Then there’s the annual shutdowns of U.S. refineries for maintenance, which temporarily reduces supply, and the switch from winter to summer gas formulations, which increase prices slightly because of additives to address emissions, said Troy Green, spokesman for AAA.
And Americans simply drive more in the spring and summer.
“People drive more when the weather is warmer and better,” Green said.
The Middle East, a major source of oil, is the wild card. Political unrest in Egypt played havoc with crude prices recently because of its location as a transit hub for global oil supply, home to the Suez Canal and a major Mediterranean oil pipeline.
For a similar geopolitical reason, oil prices rose Wednesday after reports that Iran was moving warships through the canal en route to Syria.
The average price of U.S. gasoline rose above $3 a gallon over the past week, reaching its highest level since October 2008, the Energy Department said on Monday (Dec. 27).
The national price for regular gasoline increased 7 cents from the previous week to an average of $3.05 per gallon, as rising crude oil prices bolstered fuel costs, Associated Press reported
Crude oil settled down 51 cents at $91 a barrel on the New York Mercantile Exchange on Monday as a major blizzard in the U.S. Northeast cut down on already thin holiday trading volume.
Diesel fuel prices increased 4.6 cents to $3.29 a gallon, the department said in its weekly survey of service stations.
Gasoline prices continue to rise as vacationers in RVs and campers join commuters on the roads during the peak summer driving season, the Associated Press reported today (June 28).
Pump prices likely will continue to increase over the next couple of weeks but fall short of $3 a gallon in most states. Analysts note that demand remains lackluster while supplies are ample. And consumers worried about the economy may keep traveling to a minimum.
The national average for retail gasoline prices rose 0.1 cent to $2.756 a gallon Monday, according to Wright Express and Oil Price Information Service. That’s an increase of 1.9 cents from a week ago and 11.3 cents from a year ago.
Western states tend to have higher prices. Gas is averaging $3.141 a gallon in California; $2.904 a gallon in Idaho and $2.997 in the state of Washington.
Among those states with the lowest prices were Missouri at $2.562 a gallon; Mississippi, $2.556 a gallon; and Tennessee, $2.585 a gallon.
Oil prices dipped slightly today after it appeared Tropical Storm Alex would strengthen but remain out of the Gulf region where most oil rigs and refineries are located.
“The crude market is not particularly tight right now so weather-related production outages will not have the same effect as in years past unless they reach ‘Katrina’ levels,” MF Global analyst Mike Fitzpatrick said in a research note.
“Prices, will however, be sensitive to economic data flow, particularly with respect to the economy,” he wrote.
Benchmark crude for July delivery fell 88 cents to $77.98 a barrel in midday trading on the New York Mercantile Exchange.
Oil analyst and trader Stephen Schork predicted oil prices would trade in a narrow range this week ahead of the Fourth of July holiday.
The dollar also grew stronger against other global currencies, which can hurt commodities trading. Most commodities are priced in dollars so a stronger dollar makes them less appealing to foreign investors.
As the Memorial Day weekend kicks off the summer, this seasonal question is on the minds of travelers everywhere: Where are gasoline prices headed?
Don’t be shocked if they top $3 per gallon, but be pleasantly surprised if they drop to less than what you are paying now, according to a release from Purdue University, West Lafayette, Ind.
It all depends on how the economic principle of supply and demand reacts to conditions globally, says Purdue University agricultural economics professor Wallace E. Tyner, who tracks gasoline prices daily. He expects price fluctuations throughout the summer.
Tyner had predicted earlier this year that gasoline prices would run between $2.60 and $3.20 per gallon this summer in Indiana. His prediction is unchanged.
Although the national average price of regular unleaded gasoline last week was $2.79 per gallon — 35 cents higher than at this time last year — Tyner said prices have been “pretty stable” this year.
Key drivers of gasoline prices this summer, Tyner said, will be the value of the dollar, production levels by the Organization of Petroleum Exporting Countries (OPEC), political stability — especially in the oil-producing regions — and U.S. crude oil gasoline inventories.
The OPEC nations, which heavily influence world oil prices, have said they want the price of a barrel of oil to stay in the range of $60 to $80, which would keep gasoline prices to Tyner’s predictions if all other indicators remain stable. Just this week, however, the price rose from $68 to $75. Look for prices to rise next week if oil stays up, Tyner said.
In addition, consumers take more vacations in the summer, drive more and, as a result, use more gasoline. If the U.S. stock market rises and the economy continues to improve, demand for oil will increase, leading to higher prices.
A drop in the stock market would have the opposite effect.
“If the mood in the markets turns dour and economic growth prospects seem diminished, that will put downward pressure on oil prices,” Tyner said.
Here’s one rule to help you with a best guess on whether gasoline prices will go up or down: When the value of the dollar increases, as it has done recently, the price of oil falls. Conversely, when the value of the dollar falls, the price of oil tends to increase.
Indiana consumers no doubt noticed a swing of about 30 cents per gallon in gasoline prices in May.
“With the volatility in Europe, the U.S. dollar has been moving around quite a bit in the past few weeks,” Tyner said.