AAA Says Gas Prices Spiked This Week

After experiencing remarkably consistent gas prices throughout the summer (within a 5-cent range of $2.70-$2.75 since May 28), motorists were greeted by a spike in prices this week. Higher crude oil prices, slight demand increases and the threat of an active hurricane have all contributed to this week’s jump in pump prices. The national average price for regular grade gasoline jumped to $2.78 cents a gallon, up 4 cents since last week, 17 cents higher than the same date last year, but still $1.33 less than the record of $4.11 set July 2008.
Crude oil finally broke through the key psychological $80 a barrel mark this week, trading at a three-month high of near $83 a barrel Monday. A weaker U.S. dollar, increased consumer spending, demand increases and the forecast for an active hurricane season all contributed to the recent spike in crude oil prices. However, a jump in jobless data, sent prices retreating later in the week to close the week at $80.70 a barrel.
In its weekly report, the Energy Information Administration’s (EIA) data showed crude inventories fell 2.8 million barrels to 358 million barrels, more than the forecasted drop. Gasoline stocks rose 729,000 barrels to 223 million barrels, against a forecast for a slight drop of 400,000 barrels. Gasoline demand remains robust at 9.477 million barrels per day.
The Weekend
“This week we saw crude oil trade above the $80-mark for the first time since early May, coupled with recent gasoline demand increases, and that has translated to slight increases in pump prices,” said Tracy E. Noble, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Over the next four weeks, leading up to Labor Day and the unofficial end of summer, motorists may experience the high end of gas prices for the remainder of 2010 as fuel prices tend to decline sharply during the months of September and October.”
The Week Ahead
The National Weather Center has reiterated its forecast for an active hurricane season, with the season’s peak just around the corner (late August through October). Across the Atlantic Basin, the forecast for this hurricane season (with a 70% probability) is 14 to 20 named storms, this includes eight to 12 hurricanes, of which four to six could be major hurricanes. Depending on location and severity, hurricanes pose a significant threat to oil production and refining in the Gulf of Mexico, often shutting down operations and sending crude oil and gas prices on the rise.

              CURRENT AND PAST GAS PRICE AVERAGES

              Regular Unleaded Gasoline