AAA: Gas prices spring forward

pumpingasPrices at the gas pump continue to spring forward across the country.  The national average price at the pump rose to $3.48 per gallon Friday, three cents higher than a week ago, 21 cents more than one month ago, however 24 cents below the same date last year.

The national average has increased for 28 (through Friday) straight days – the longest streak since a 36-day stretch of steadily rising prices over January and February of last year.  On Feb. 21 this year, the national average was 39 cents less than on Feb. 21, 2013. That year-over-year gap has narrowed by 15 cents over the last two weeks.  Last year the national average peaked at $3.79 on February 27, the earliest peak on record.

Rapidly escalating tensions in Ukraine have been the major story for the oil markets this week.  At 10.4 million barrels per day, russia is the third largest oil-producing country after Saudi Arabia (11.7 million barrels per day) and the United States (11.1 million barrels per day), according to the most recent Energy Information Administration data.  Although there have been no disruptions to global supplies yet, any further escalation of hostilities could propel global oil prices higher, which has the potential to magnify the seasonal price increases at the pump.  Earlier in this week, crude oil prices spiked over the rising tensions between russia and Ukraine, settling close to the $105 per barrel mark, the highest settlement price in five months. However, as the week progressed and russia softened its rhetoric, crude oil prices eased back close to the $100 per barrel mark.  Crude oil settled at $102.58, virtually unchanged on the week.

In its weekly report, the Energy Information Administration (EIA) noted that U.S. crude oil stocks rose 1.4 million barrels to 363.8 million barrels.  Gasoline stocks dropped 1.63 million barrels to 229 million barrels.  According to the EIA data, gasoline demand dropped 124,000 barrels per day (bpd) to 8.411 million bpd, however the weekly demand figure remains above the four week average of 8.325 bpd.

AAA expects gas prices to increase 10 to 20 cents more this spring before falling after Memorial Day, barring any unexpected market-moving events,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “However, the intensifying situation with russia and Ukraine could constitute such an event.  Further escalation, including any disruption to global supply, could propel global oil prices higher, which has the potential to magnify the seasonal price increase at the pump.”

Last year the national average peaked at $3.79 on February 27, the earliest pre-summer peak on record.  Gas prices are expected to continue to rise in the coming weeks due to seasonal refinery maintenance, which means the year-over-year discount will narrow further; however the national price at the pump is unlikely to surpass last year’s high and AAA expects it to peak between $3.55 – 3.75, barring any unexpected market moving events.  The rapidly escalating geopolitical tensions with russia and Ukraine could constitute such an event should global oil supply be impacted.

 

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 

3/9/14

Week Ago

Year Ago

National

$3.49

$3.46

$3.70

Virginia

$3.27

$3.25

$3.62

Charlottesville

$3.24

$3.22

$3.59

Norfolk Area

$3.28

$3.25

$3.55

Richmond

$3.25

$3.24

$3.57

Roanoke

$3.23

$3.23

$3.53

Crude Oil

$102.58 per barrel (at Friday’s close)

$102.59 per barrel (2/28/14)

$91.56 per barrel

(3/7/13)

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