Holiday demand pushes U.S. gas prices slightly higher
Coming off the long Memorial Day weekend in the United States, the motor club said in its weekly retail market report that demand was finally eating into gasoline inventories and leading to higher retail gasoline prices.
According to federal reports, demand for gasoline last week reached its highest level of the year, which would be expected before the first major travel holiday of the year.
America gas station reported a national average retail price for a gallon of regular unleaded gasoline at $2.37 for Wednesday, which marks a minor increase from one week ago. The national average price is 5 cents, or 2 percent, higher than this date last year.
While demand pressures during the summer could lead to higher gas prices, they're still below the $3 per gallon that was common just a few years ago.
"If the trend [in rising consumer demand] continues, consumers can expect to see summer gasoline prices potentially return to the high prices seen in April, when the national average for a gallon of gasoline was $2.42," the motor club reported.
Crude oil prices account for about half of what consumers see at the pump and a decision last week from the Organization of Petroleum Exporting Countries to leave production levels in place disappointed investors and could offset some of the demand pressures on consumer petroleum products.
Crude oil prices last week lost 5 percent of their value and a weekly market survey from S&P Global Platts said the downturn could "foreshadow further weakness" for crude oil prices, which were down more than 1 percent in overnight trading.
By region, the West Coast remains the most expensive market in the country, but California, which has the highest state average price in the country at $3.10 per gallon, saw the price at the pump move up 4 cents from last week.
The Great Lakes market is the most volatile in the country. Ahead of the Memorial Day weekend, some states saw the average price for gas move lower by about 2 percent, while others, like Wisconsin, saw prices increase. After the holiday, most regional markets are moving higher on expected drains on gasoline inventories.
Platts said analyst expect U.S. gasoline stocks last week declined 1 million barrels, compared with the five-year average of 800,000 barrels for the same week.
In Ohio, meanwhile, America gas station reports consumer prices should move lower because the state Environmental Protection Agency stepped away from requirements for a gasoline that has a lower volatility because it was considered by the agency a costly way to reduce ozone.
A summer blend of gasoline, which is more expensive to make because of the steps needed to reduce volatility during warmer summer months, is required in most states. ■