Gas Prices Continue To Creep Up As Seasonal Demand Increases

Although we saw gas prices increase for the fourth consecutive week, this week’s increases were modest compared to last week’s 6-cent jump. The national average price of regular grade gasoline rose 3 cents this week to $2.81 a gallon, 88 cents above last year’s prices and $1.30 below the record-high set in July 2008. Prices at the pump typically increase with the start of the spring driving season.
Crude oil settled below the $80-mark for the first time in nearly two weeks Monday, but would rise above that critical benchmark for the remainder of the week. After rising $3 a barrel midweek, spurred by the Federal Reserve’s decision to keep key interest rates unchanged and OPEC’s announcement to leave production quotas unchanged, crude fell slightly at week’s end as the U.S. dollar rebounded against foreign currencies. Crude oil typically drops when the dollar is strong. At the close of trading Friday, crude oil settled at $80.68 a barrel.
In its weekly report, the Energy Information Administration (EIA) showed crude stocks rose 1.0 million barrels to 344 million barrels, in line with the forecasted 1.1 million barrel build. Gasoline stocks fell 1.7 million barrels to 227.3 million barrels, almost double the forecasted 800,000 barrel drop. The EIA also reported U.S. gasoline demand was up over the past four weeks by 1.3% versus the same period a year ago.
The Weekend
“After a record-breaking winter in many parts of the Mid-Atlantic region, spring officially arrives this weekend and with that comes the typical increase at the gas pumps,” said Tracy Noble, Public Affairs Specialist for AAA Mid-Atlantic. “As motorists take to the roads to enjoy the beautiful spring weather we’ll undoubtedly see seasonal demand increases and prices will likely crack the $3.00 a gallon mark in the coming weeks.”
The Week Ahead
Although gas prices will likely hit the $3.00 a gallon mark as the spring and summer driving seasons get underway, analysts believe there are several factors that will prevent prices from climbing much higher. Unemployment continues to play a key role in gas prices, as well as our overall economic recovery. People are not driving to work like they used to, therefore the number of vehicle miles traveled in the U.S is down. In addition, refiners aren’t running at full capacity. Therefore, higher prices at the pumps this spring and summer could encourage increased production.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)