After a four-month drop, gas prices have been on the rise for nearly four weeks since January 27. Friday’s national average price of $2.28 per gallon is four cents more than one week ago and 23 cents more than one month ago. Consumers are still saving $1.10 per gallon at the pump in comparison to last year, a spread that has slowly started to narrow after widening to as much as $1.25 per gallon on January 26.
Gas prices have increased sharply due to more expensive crude oil costs and the start of refinery maintenance season. Gas prices typically increase this time of year as refineries conduct maintenance, which may limit fuel production. Rising crude oil costs have also made it more expensive for refineries to produce gasoline, which has contributed to higher pump prices.
OPEC’s decision not to act as a market-stabilizer is beginning to impact global energy development, as companies in countries with more expensive production costs have reportedly begun curtailing investments and employment. In addition, U.S. crude oil inventories have reached their highest levels in decades. To the contrary, high crude stocks pushed crude prices below $50 per barrel this week. These factors are reflective of the global oil market’s overall volatility. At the close of Friday’s formal trading on the NYMEX, crude oil settled at $50.34 per barrel, down nearly five percent on the week.
The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories saw a sizable 7.7 million barrel build, reaching record levels at 425.6 million barrels. Gasoline stocks squeaked out a 500,000 barrel build, to 243.1 million barrels. U.S. gasoline demand saw a rebound of more than 500,000 barrels per day (bpd) to 8.809 million bpd.
“Gasoline prices have increased due to more expensive crude oil costs and the start of refinery maintenance season,” said Martha M. Meade, Manager of Public and Government Affairs. “It’s fairly typical for pump prices to rise this time of year. Refinery maintenance limits fuel production. Plus, rising crude oil costs have made it more expensive for refineries to produce gasoline. That said, AAA anticipates the national gas price average will remain under $3.00 per gallon this year.”
Even with the national average trending higher, ample gasoline supplies and lower crude oil costs than in recent years should prevent prices from rising as high as in recent memory. In addition, severe cold weather, particularly in the Northeast and Midwestern United States, may limit driving and gasoline demand in the near term. Barring any major disruptions in supply, AAA anticipates drivers will continue to pay below $3.00 per gallon throughout 2015.
CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)
| 2/22/15 | Week Ago
2/15/15 |
Year Ago
2/22/14 |
|
| National | $2.29 | $2.25 | $3.39 |
| Virginia | $2.17 | $2.12 | $3.22 |
| Charlottesville | $2.16 | $2.10 | $3.18 |
| Norfolk Area | $2.21 | $2.16 | $3.23 |
| Richmond | $2.18 | $2.10 | $3.21 |
| Roanoke | $2.08 | $2.08 | $3.19 |
| Crude Oil | $50.34
per barrel (Friday 2/20/15 close) |
$52.78
per barrel (Friday 2/13/15 close) |
$102.92
per barrel (2/20/14) |
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Chris Graham
