March Madness: Gas prices soar to six-month high

It’s been March Madness at the gas pump of late, as prices soared to their highest price point in six months. The national average price at the pump rose to $3.53 per gallon Friday, two cents above week ago prices, and 15 cents more expensive than one month ago.

Here is the one saving grace. The average price of gas is cheaper than it was at this point last year, when it was going for $3.69 per gallon, a swing of 16 cents.

The seasonal surge in retail gasoline prices wasn’t entirely unexpected. This time of year refineries across the USA are undergoing maintenance ahead of the EPA-mandated switchover to the production of more expensive summer-blended gasoline. The process, which is slated for completion by April 1 in most years, is often accompanied by painful increases in retail gasoline prices for the world’s largest energy consumers, and this year is no exception.

Other factors are also in play. Crude oil futures, the largest factor (about two-thirds) in the street price of gas, had been trading above $100 per barrel for nearly a month although the commodity has been trending below $100 for seven of the last eight trading days. West Texas Intermediate crude oil settled higher for the week on Friday rising to $99.46 per barrel.

In its weekly report, the Energy Information Administration noted that U.S. crude oil stocks built by 5.9 million barrels to 375.9 million barrels. Gasoline stocks decreased by 1.5 million barrels to 222.3 million barrels. Last week gasoline demand came in at 8.512 million barrels per day (bpd), a decrease of 437,000 bpd. The first three weeks of the year combined for an average of 8.602 million bpd.

“Consumers are beholding an annual springtime ritual: the often shocking increase in pump prices as the weather turns warmer,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Although it is expected, it doesn’t make it any less painful. As we have seen in the past, any time gasoline reaches and surpasses $3.50 a gallon, many motorists are discomfited by pump prices. The one consolation this time is the likelihood that most consumers should still pay less to buy gas than in recent years.”

AAA expects the national average will peak in late March or early April between $3.55 and $3.75 per gallon. The peak is expected due to seasonal refinery maintenance and the approaching switchover to producing summer-blend gasoline that is required by May 1. In 2011, the national average peaked at $3.98 per gallon on May 5. In 2012, the national average peaked at $3.94 per gallon on April 5. In 2013, prices peaked at $3.79 on February 27, which was the earliest peak on record.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)