AAA: Gas prices continue to climb
The price of regular blend gasoline rose eight cents last week, bucking the typical trend of gas prices dropping during the first week of August. More Americans take to the highways in the period between the first week of August and Labor Day Weekend than any other time of the year. American drivers also tend to take their longest road trips of the year. So, expect gasoline demand to also reach its highest point of the year. But will pump prices follow suit?
Historically, gasoline prices in August have declined seven out of the previous ten years. Nevertheless, AAA Mid-Atlantic is forecasting that gas prices for the last full month of summertime will likely remain relatively flat, or may even experience a small increase for the first time since 2009. After that, fuel prices should begin to fall soon after Labor Day, as the summer driving season ends, as gas demand declines from its August highs, and as refineries make the transition to less expensive fuel blends.
Although the cost of gas is 13 cents lower than last year, prices at the pump have continued their climb now for the fifth straight week. The national average for a gallon of regular self-service gasoline was $3.57 Friday, up from $3.49 a week ago.
National average gas prices increased 5.1 percent or 17 cents a gallon over the course of July. This was the first monthly increase since March and the largest increase for the month of July going back to at least 2000, when AAA’s records begin.
The average retail price of gasoline in July was $3.42 a gallon. This was the third-highest average price for July ever recorded. National average gas prices increased 26 days in July after reaching a summertime low of $3.33 a gallon on July 2.
Crude oil prices nudged above $90 per barrel, having closed Friday at $91.40 a barrel on the New York Mercantile Exchange (NYMEX). Oil rebounded from its lowest close in three weeks after Friday’s much-anticipated unemployment rate added 163,000 jobs, according to the U.S. Department of Labor. The jobs numbers were a mild bright surprise since 89 economists surveyed by Bloomberg News called for a gain of 100,000.
“Nationwide, drivers experienced a reversal of fortunes at the pump last month, after three months of steady declines in retail fuel prices,” said Martha Meade, AAA Mid-Atlantic’s Manager of Public and Government Affairs. “Higher global oil prices and increased demand for gasoline during the busy summer driving season were the primary factors that sent pump prices higher in July. Motorists were troubled by the 17-cent spike in gas prices last month. But the price outlook will become rosier in the days ahead, as the kids return to school in the next few weeks and the summer driving season comes to an end.”
Motorists will continue to face high pump prices this week. However, relief may be around the corner as AAA Mid-Atlantic expects gas prices to drop this fall.
Market developments that could alter the August forecast include news indicating a strengthening or worsening of the global economy; U.S. unemployment data; European sovereign debt; and geopolitical events in the Middle East, among others.
Mother Nature could also play a role in rising gas prices. Despite the slow start to the season, AccuWeather is upholding its forecast of five hurricanes, two of the major hurricanes and about two of them expected to impact the U.S. Storm frequency has historically spiked in late August. Hurricane Irene hit the Mid-Atlantic region August 27 and August 28 last year.