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AAA: Gas prices climb 17 cents in last two weeks

AAA LogoThe national average price for regular unleaded gasoline climbed above $2.50 per gallon on April 24 for the first time in more than four months.

Average prices have now increased by 17 cents per gallon in just two weeks.  This recent increase has been a product of rising global crude prices, the seasonal switch to summer-blend gasoline (switchover deadline is May 1), and regional refinery issues.  Motorists are currently paying an average of $2.60 per gallon, representing an increase of nine cents versus one week ago, and 19 cents versus one month ago.  Despite inching higher for 16 consecutive days, the national average continues to reflect a significant discount of $1.09 per gallon in comparison to the same date last year.  Following the transition to summer-blend gasoline and as refineries complete seasonal maintenance, the national average may return to below $2.50 per gallon, though much of the forecast will depend on what happens with the cost of crude oil.

Crude oil prices have increased in recent weeks as the market considers a possible slowdown in domestic oil production. A reduction in growth could signal that the market is rebalancing supply and demand in response to relatively low prices this year. In addition, continued conflict in places such as Yemen and Iraq, adds increased risk and uncertainty that can lead to higher prices.  West Texas Intermediate (WTI) crude oil finished at its highest price in approximately four months and has increased more than $15 per barrel since reaching a six-year low in mid-March.  At the close of Friday’s formal trading on the NYMEX, WTI crude oil settled at $59.15 per barrel, up nearly 3.5 percent on the week.

The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories saw a 1.9 million-barrel-build to 490.9 million barrels, which makes the total build for 2015 108.5 million barrels.  Gasoline stocks were up 1.7 million barrels to 227.5 million barrels.  Gasoline demand took a step back last week by the EIA’s estimates.  Implied gasoline demand came in at 8.92 million barrels per day (bpd), a drop of 265,000 bpd from the previous week.  The four-week average for gasoline demand is running 2.6 percent higher.

“Gas prices have climbed to the highest levels of the year due largely to rising crude oil costs,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “As prices keep climbing, it is getting more difficult to believe that gas was below $2 per gallon at the majority of stations earlier this year. AAA does not expect the national average price of gas to rise above $3 per gallon this summer, but it is unclear whether consumers will pay more or less than today in the coming months.”

Despite recent price increases, drivers should still pay the lowest gas prices for the summer driving season in at least five years, and it is even possible that gas prices will reach the lowest summertime levels in a decade if the cost of crude oil drops again.  Summer travel could reach record levels because the economy is stronger and gas prices are much cheaper than in recent years.  Lower gas prices will make travel more affordable and this may motivate Americans to take a summer road trip. About 6 in 10 Americans say they are more likely to take a road trip of 50 miles or more in 2015 if gas prices remain near recent levels, according to a new AAA survey.  Oil supplies are at record levels and refineries have increased production capacity in recent years, which means there should be enough fuel to meet an increase in travel demand this summer.

 

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 

5/3/15 Week Ago4/26/15 Year Ago5/3/14
National $2.62 $2.53 $3.68
Virginia $2.40 $2.33 $3.51
Charlottesville $2.37 $2.29 $3.48
Norfolk Area $2.38 $2.30 $3.55
Richmond $2.44 $2.35 $3.46
Roanoke $2.31 $2.25 $3.42
Crude Oil $59.15per barrel

(Friday 5/1/2015 close)

$57.15per barrel

(Friday 4/24/15 close)

$101.94per barrel

(5/1/14)



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