AAA Says Pump Prices May Exceed $3 Per Gallon Again

Crude oil increases continue to affect prices at the pump as motorists undoubtedly noticed again this week. Is it a harbinger of things to come? Since prices tend to change with the seasons, motorists should expect a climb in pump prices as springtime approaches. Because of the rising average crude oil price, “pump prices may exceed $3 per gallon at times during the approaching spring and summer,” the Energy Information Administration (EIA) is forecasting. The national average price of regular grade gasoline increased 2 cents this week to $2.72 a gallon Friday, 79 cents higher than year ago prices and $1.39 below the July 2008 record-high price. Closing out the month of February this week, gasoline maintained a 10-cent band between $2.61 and $2.71 for the month.
Crude oil spent the week trading in a tight range between $78 and $81 a barrel. Two major factors – the state of the economic recovery and the strength of the U.S. dollar – continue to be the primary influences over the direction of oil prices. Crude climbed above $81 a barrel Friday toward a 7-week high, after China’s economic stimulus measures boosted hopes for strong growth in the world’s second-largest oil consumer. Also this week, retail sales for February showed signs of improvement in February and jobs data was better-than-expected. After a week of tight trading, crude hit an intra-day high of $82.07 a barrel before it settled at $81.50 at Friday’s close.
In its weekly report, the EIA showed crude stocks rose 4.1 million barrels to 341.6 million barrels last week, the highest since the end of August 2009. Gasoline stocks rose 700,000 barrels to 231.9 million barrels. Also this week, the EIA reported demand at 8.882 million barrels per day (bpd), which the agency said is on par with the same period last year.
The Weekend
“Motorists have undoubtedly noticed slight increases at the gas pumps in recent weeks and if crude oil continues to trade above $80 a barrel prices may continue to climb in the days ahead,” said Tracy Noble, Public Affairs Specialist for AAA Mid-Atlantic. “Also, with the much-anticipated start of spring less than two weeks away, seasonal demand increases are likely to move gas prices higher. The EIA forecasts that the annual regular-grade retail gasoline price will average $2.84 per gallon in 2010.”
The Week Ahead
After an exceptionally brutal winter throughout the Mid-Atlantic region, many are looking ahead to spring to take to the roads once again. Typically retail gasoline prices climb as the spring driving season approaches. During early spring the refineries switch to producing summer fuel blends to meet the demand. While the past few years have been anything but typical with regards to retail gasoline prices, the early spring has seen a steady climb in prices going several years back. With increased demand and continued crude oil volatility, prices at the pump are likely to continue to climb slightly in the coming days.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)