Pain at the pump: Gas prices up 17 cents nationally in January

National gas prices have started to exhibit the seasonal increase motorists are familiar with to begin the calendar year.  While geopolitical tensions or domestic refinery issues exacerbated this run up each of the last three years, the absence of such catalysts has resulted in a less dramatic increase thus far in 2014.

The national average price at the pump rose to $3.45 per gallon Friday, six cents higher than a week ago, 17 cents more than one month ago, yet 33 cents below the same date last year.  Despite a 17-cent increase in February (compared to a 32-cent jump in February 2013), moving higher for 20 straight days (through February 27), the national average still reflects a substantial year-over-year discount.

Crude oil has traded at about the $100 per barrel mark for the third consecutive week, after spending only one day above the triple-digit threshold from October 21 through February 7.  As noted, cold weather and limited demand have kept a lid on gasoline prices; however, as the weather warms and refineries begin the switchover to produce more expensive summer-blend gasoline, pump prices are likely to continue higher, especially if crude oil prices remain elevated.  While the approach of spring in the U.S. and weaker Chinese manufacturing data could reduce crude oil consumption, production and export difficulties in Libya and South Sudan have helped crude sustain premium prices.  Crude oil settled at $102.59 Friday, virtually unchanged on the week.

In its weekly report, the Energy Information Administration (EIA) noted that U.S. crude oil stocks were relatively unchanged, seeing a slight uptick of 100,000 barrels to 362.4 million barrels.  Gasoline stocks dropped 2.8 million barrels to 230.6 million barrels.  Gasoline demand saw a surprise jump, moving up more than six percent week over week. According to the EIA data, gasoline demand moved up 505,000 barrels per day (bpd) to 8.535 million bpd, the highest demand figure and the first time above 8.5 million bpd in about five weeks.  The U.S. is consuming about the same amount of gasoline for late-February as 2013.  Looking ahead, it does not look like it will be very difficult to beat demand statistics from March for the last two or three years.  Pent-up demand from the winter storms and an improving economy are expected to show up in March demand figures.

“Prices at the pump have started to exhibit the seasonal increase motorists are used to seeing this time of year,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “Despite moving higher for 20 straight days in February, the national average gas price still reflects a substantial year-over-year discount.  In fact, this week’s prices are the lowest for this week since 2011.  Cold weather and limited demand across the country have helped to keep a lid on prices for motorists, even with crude oil prices near a multi-month high.”

Prices at the pump are likely to come in like a lion in March and are expected to rise throughout most of the month.  Industry analysts believe March will deliver the largest gas price increases for the year thus far and could top $3.70 per gallon by Easter (April 20).  AAA expects the gas price peak to be lower than last year with the national average price of gas reaching an estimated $3.55 to $3.75 per gallon.  After a springtime peak, gas prices generally ease a bit as production returns to normal.

 

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 

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.