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AAA: Gas prices hikes on the horizon?

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In recent years, gas prices have trended higher to start the year, however cold temperatures across much of the country have led to weak demand and kept prices flat to begin 2014.

AAA-LogoPump prices continued to trickle down again this week, albeit slightly.  The national average price at the pump dropped to $3.27 per gallon Friday, a penny below week ago prices, yet four cents less than one month ago and 29 cents below the same date last year.  The national average has now posted 28 consecutive weekly declines and today’s year-over-year discount is the largest since November.  After rising to a recent high of $3.33 on January 3, the national average has now declined for 28 of 35 days.  The national average drifted four cents lower last month, compared to a 17-cent increase in January 2012 and 13-cent increase in 2013.  This marked the first time prices had declined during the month since 2008.

Crude oil prices, like retail gasoline prices, have been relatively flat to begin the year.  This trend continued today as West Texas Intermediate (WTI) settled $1.06 lower at $96.43 per barrel at the close formal trading on the NYMEX.  After climbing to a new 2014 high of $98.23 last Thursday, crude oil prices have fallen back to within $1 of where they began the year.  Crude oil settled at $99.88 Friday, up 2.5 percent on the week.

In its weekly report, the Energy Information Administration noted that U.S. crude oil stocks saw a slight build of 400,000 barrels to 358.1 million barrels.  Imports of crude oil, though, dropped sharply last week to 6.887 million barrels per day (bpd).  Twice in January, crude oil imports have been below 7 million bpd.  Before this year, it had only happened twice this century, illustrating proof that domestic production is backing out of imports.  Gasoline stocks also saw a slightly build of 400,000 to 235 million barrels.

“Recent gas price stability is unfortunately expected to be short-lived as we move into spring refinery maintenance, which typically causes temporary price spikes,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “In addition to refinery maintenance, global factors continue to impact pump prices.  For example, the U.S. now exports more gasoline, heating oil, and diesel fuel than it imports, mainly because these refined products fetch a higher price on the global market. This keeps supply and prices artificially tight in the U.S.”

Despite the quiet start to the year, AAA expects the national average to move higher in the coming weeks and months due to the same seasonal factors that have historically led to rising prices during the first quarter of the year.  This includes increased demand; scheduled refinery maintenance, which often begins in February between strong demand periods for winter heating oil and summer gasoline; and the mandated switchover to summer-blend gasoline production in advance of theMay 1 deadline. These final two processes can lead to unexpected issues, which can result in even sharper temporary price increases for areas supplied by affected facilities.  In 2013, the national average jumped 49 cents from January 1 and peaked at $3.79 on February 27. In 2012, pump prices surged 66 cents from the same date to a peak of $3.94 on April 5. In 2011, prices soared 91 cents to a peak of $3.98 on May 5.

 

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 

2/9/14

Week Ago

Year Ago

National

$3.28

$3.28

$3.58

Virginia

$3.13

$3.15

$3.45

Charlottesville

$3.14

$3.15

$3.36

Norfolk Area

$3.15

$3.19

$3.46

Richmond

$3.06

$3.10

$3.44

Roanoke

$3.10

$3.11

$3.37

Crude Oil

$99.88 per barrel (at Friday’s close)

$97.49 per barrel (1/31/14)

$95.84 per barrel

(2/7/13)

 

AAA is the most comprehensive resource for gas prices.  Unlike the Lundberg Survey of 7,000 gas stations, AAA reports reflect actual prices from credit card transactions at more than 100,000 gas stations in the U.S.

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