Motorists are paying more than ever for a late-summer drive, due to rising crude oil prices and refinery issues throughout the country.
Daily gas price records continue to shatter across the country, as the national average price for a gallon of regular self-serve gasoline rose to $3.73 per gallon on Friday. This price is a penny more than one week ago, 24 cents more than one month ago and 15 cents more than the same day last year.
Although the pace of increases has slowed this week, analysts believe the national average could increase to $3.75 per gallon by Labor Day. By comparison, gas prices stayed below $3.70 in late August and early September in 2011.
Crude oil continued to gain momentum for much of the week, however, falling equity markets and poorer economic data from the three major oil consuming regions (U.S., China and Europe) curbed the surge in oil prices by week’s end. However, continued geopolitical tensions in the Middle East and possible production outages next week in the Gulf of Mexico due to Tropical Storm Isaac are likely to prevent any further declines in crude oil prices. The commodity closed at $96.15 Friday, down from over $98 per barrel earlier in the week and 14 cents above last week’s close.
In its weekly report, the Energy Information Administration (EIA) reported the nation’s crude oil stocks fell sharply by 5.4 million barrels to 360.7 million barrels. Gasoline stocks fell by 962,000 barrels to 202.7 million barrels. Gasoline demand was measured at 9.081-million barrels per day (bpd), down 227,000 bpd, indicating that the previous week’s 468,000 bpd gain did indeed feature plenty of loading up ahead of predictable price increases. But last week’s number is still stronger than most 2012 driving season weeks.
“Late summer driving continues to cost motorists more than ever for this time of year, as prices at the pump continue to rise,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Although the pace of this upward trend has slowed in the last week, experts believe it will continue for about two more weeks before reversing as the busy summer driving season ends and refineries switch to making less expensive gasoline blends. That said, as storm activity heats up the Atlantic and Tropical Storm Isaac strengthens, gas prices will almost certainly be impacted if we see oil production disruptions in the Gulf of Mexico.”
AAA Travel projects 33 million Americans will journey 50 miles or more from home during the Labor Day holiday weekend, a 2.9 percent increase from the 32.1 million people who traveled last year. The total number of 2012 Labor Day holiday travelers is expected to reach a new post-recession high, and is the third increase in holiday travel this year, according to the AAA/IHS Global Insight 2012 Labor Day Holiday Travel Forecast. Approximately 28.2 million people (85 percent of holiday travelers) will make their Labor Day holiday journey by automobile, considered the most convenient mode of travel for many Americans. This is a 3.1 percent increase over the 27.3 million people who took to the nation’s roadways in 2011.
The nation’s oil interests in the Gulf of Mexico are closely watching the path of Tropical Storm Isaac. Experts believe the storm will be upgraded to a hurricane with the potential to make landfall in Florida before moving into the Gulf. Any production disruptions as a result of Isaac would undoubtedly have an impact on already rising gas prices.
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