Gas prices are surging and quickly headed to $4.00 per gallon. February is the earliest gas prices have ever topped $3.50 per gallon nationally. Prices typically rise ahead of the summer driving season, but this year has been anything but typical. The national average retail price for regular grade gasoline climbed to $3.65 per gallon this week, 12 cents higher than a week ago, 27 cents higher than month ago prices and 42 cents higher than a year ago. Gas prices are up 37 cents since the beginning of the year and are within 49 cents of the all-time record high ($4.11 gal) set in July 2008.
Crude oil prices rose significantly, despite the shortened week, with four straight days of strong gains (topping $109/barrel Friday). Many factors have been churning prices higher: the Greek debt crisis looks like it is being resolved; global oil supplies threatened in different regions, especially the conflict in Iran; the U.S. economy appears to be on the mend; and speculation. Crude oil prices are nearing the peak 2011 highs (just shy of $115/barrel late last April) just eight weeks into 2012. The commodity marked its biggest weekly gain since late December and highest settlement since May 2011 to close the week at $109.77, up more than 6 percent for the week and up 11 percent since the beginning of the year.
In its weekly report, the Energy Information Administration (EIA) showed the nation’s crude oil stocks grew by 1.6 million barrels to 340.7 million barrels. Gasoline stocks fell 700,000 barrels, to 231.5 million barrels. Gasoline demand as implied by the EIA saw a jump last week after recent weeks that have slipped below 8 million bpd, with a 461,000-bpd jump to 8.628 million bpd. The week-to-week jump may look like a rebound on the surface as it is the highest demand number so far this year, but a deeper look shows that last week’s gasoline demand is nearly 500,000 bpd below the same week last year. The four-week average for gasoline demand also shows signs of weakness with the most recent tally running a little more than 6% behind the same time last year
“Analysts anticipate the Mid-Atlantic region will be a hot spot for gasoline prices in the coming weeks and months, a ‘crude awakening’ for motorists who continue to endure pain at the pump,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “The next 60 days will prove extremely volatile for gas prices in the region, following the idling of two Philadelphia area refineries in recent weeks and the threat of another closure this summer. Prices at the pump are likely headed to $4.00 per gallon in the coming weeks, which does not bode well for motorists who have already had to deal with two months of record setting gas prices to start the year.”
The U.S. Northeast is leading the way in high gas prices, compared to the rest of the country –with dramatic increases possible in the spring. The price per gallon in the region could reach up to $4.25 a gallon by the end of April – as much as a dollar higher that what it costs in the Midwest – due to tightened sources of supply. Two Philadelphia area refineries are idled, affecting east coast supplies, and the situation could worsen as a third refinery, a Sunoco facility in Philadelphia, is set to close July 1st if no buyer is found. Analysts believe the national average price for regular grade gasoline will peak between $3.75 and $4.25 per gallon this spring, well ahead of the traditional peak driving season.
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