Gas prices are at their highest level ever for this time of year, a time when prices at the pump typically fall. Just two weeks out from the Thanksgiving holiday, motorists are left wondering what will happen to gas prices leading up to the busiest travel holiday of the year. Thenational average for regular grade gasoline gained 2 cents this week to $3.44 Friday. Prices are 3 cents above month ago prices and 58 cents above year-ago prices, yet 67 cents below the all-time high of $4.11 per gallon set in July 2008. Analysts believe gas prices will remain above $3.40 per gallon through Thanksgiving and decline, albeit slightly, through the end of the year.
American households are spending 8 percent of their income on gasoline and the nation is on track to have the highest fuel bill ever, based on statistics just compiled by OPIS Retail Group. There is a consolation prize: The estimated monthly household cost for buying gasoline did drop in October by 3.5 percent to $332.40, thanks to a decline in retail pump prices to a national average of $3.44 per gallon, the lowest since February. Still, when compared to last year household fuel bills are $50 per month higher. Moreover, American’s are on track to cough up a record $490 billion for gasoline in 2011. That would top 2008’s fuel bill of $448 billion. Last year’s tally was around $390 billion, so the current pace of spending would exceed last year by $100 billion or 25 percent. Year-to-date Americans have spent 8.4 percent of their income on gasoline, up from 6.7 percent last year and on track surpass the 7.9 percent number hit in 2008.
Crude oil remained volatile again this week, reacting to national and international economic news. New claims for unemployment benefits in the U.S. fell last week to their lowest level since early April and the trade deficit unexpectedly shrank in September, both indicators of a recovering economy that will ultimately boost fuel demand. Progress in Italy’s efforts to resolve its debt problems, in addition to leadership changes in bothItaly and Greece, have demonstrated Europe’s willingness to take the necessary steps to contain the region’s debt crisis. The commodity closed at a 15-week high Thursday of $97.78 and continued gains Friday to close the week at $98.99, marking its sixth consecutive weekly gain and a nearly 30 percent increase since early October when crude was $75 per barrel. Some analysts believe crude oil will cross the $100 per barrel threshold in the not too distant future. In 2008, crude jumped to a record high of $147 per barrel.
The U.S. Energy Information Administration’s weekly report showed crude stocks fell by 1.4 million barrels to 338.1 million barrels. Gasoline stocks dropped 2.1 million barrels to 204.2 million barrels. Gasoline demand remained poor, at 8.671 million barrels per day (bpd), despite a 175,000 bpd increase over last week.
“Thanksgiving is less than two weeks away and with most holiday travelers planning to take to the road to get to their holiday destinations, many are left wondering how much higher gas prices will creep at a time of year when they are typically on the decline,” said Windy VanCuren, Public Affairs Specialist for AAA Mid-Atlantic. “Gas prices have been anything but typical this year, which leaves motorists extremely skeptical when it comes to price trends. Although most motorists will unlikely alter their travel plans for the Thanksgiving holiday, they will undoubtedly be asking themselves why prices are on the rise and how long the trend will continue. This remains to be seen, although some analysts believe prices will remain steady or even slightly lower through the end of the year before climbing into potentially record-high territory next spring and summer.”
Atypically high gas prices for this time of year have left motorists wondering what is in store in the coming months and into next year. Despite projections for slight declines in prices through the end of the year, crude oil volatility and potential demand resurgence due to positive economic indicators could send gas prices well above the 2008 record high of $4.11, perhaps as high as $4.25 to $4.50 per gallon.
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