Gas Prices Climb to Six-Month High

Gas prices are at their highest levels in more than six months, and the national average has remained above $2 per gallon for 40 consecutive days. Today’s average price of $2. 22 represents an increase of eight cents per gallon on the week, and prices are up 16 cents per gallon on the month. Ample gasoline supplies and relatively lower crude oil costs are helping to sustain year-over-year savings, with today’s price discounted by 39 cents per gallon versus a year ago.

Gasoline demand continues to break seasonal records as low prices motivate people to drive more. Additionally, crude oil costs are also increasing and recently reached new 2016 highs. Increased demand and more expensive oil costs have helped to push gas prices higher in many parts of the country over the past few weeks, and prices may move even higher leading into the busy summer driving season.

Locally, South Jersey drivers are paying an average of $2.03 for a gallon of unleaded gas. This is a 9-cent increase in the past week ($1.94), and 22 cents more per gallon than one month ago ($1.81). However, today’s price is still 43 cents less than one year ago ($2.46).

The average price at the pump for the month of April was $2.10 per gallon, which is the lowest average for this month since 2009. Only 20 percent of U.S. stations are still selling gas for less than $2 per gallon and pump prices are moving due to growth in fuel demand, which is up 5.6 percent versus a year ago, according to the latest data from the U.S. EIA. Gas prices have increased by 52 cents per gallon after hitting a 2016 low in mid-February.

Four states are posting averages below $2 per gallon, which is nine fewer states than last week’s report. Retail averages have historically fluctuated during this time of year, and although the overall price at the pump is beginning to trend higher, gas prices during this year’s summer driving should remain noticeably discounted in comparison to previous years.

The national average price of diesel has been cheaper than gasoline for the past five days, and diesel may remain less expensive than gasoline for the remainder of the summer. In recent years it has been rare for diesel to be cheaper than gasoline. The last time the national average price of diesel was less than gasoline for a significant period was in the summer of 2009, when the average was cheaper for 48 days in a row. It is possible that diesel will remain cheaper than gasoline for the next 3-4 months due to abundant supplies and seasonal factors impacting both gasoline and diesel.

Quick Stats

The nation’s top five most expensive markets are: California ($2. 80), Hawaii ($2. 58), Nevada ($2.48), Alaska ($2.42) and Washington ($2.42).

The nation’s top five least expensive markets are: Oklahoma ($1.96), Texas ($1.98), Missouri ($1.99), Kansas ($1.99) and Mississippi ($2.00).

The most common price at the pump is $1.999 per gallon.

Consumer Attitudes

The lower price environment for gas prices has not only led to drivers taking to the roads at record levels, but is also shifting attitudes about various price points. Attitudes towards gas prices have changed significantly over the past few years, according to a new survey by AAA:

Half of U.S. drivers now believe gas is “too high” at $2.50 per gallon. This figure has dropped significantly in relationship to the price of gas. As recently as 2014, half of Americans believed gas was “too high” at $3.30 per gallon, while last year half of Americans believed it was “too high” at $3 per gallon. Only nine percent of U.S. stations are selling gas for more than $2.50 per gallon today.

More than 35 percent of Americans believe that gas is “too high” based on today’s average price, even though gas prices are at the lowest levels since 2009. The vast majority of Americans also do not believe that gas is “cheap” today.

Oil Market Dynamics

Oil is the largest cost associated with producing gasoline, and every $1 change per barrel can increase gas prices by as much as 2.4 cents per gallon. The cost of crude has increased by approximately $10 per barrel since the beginning of April, attributed to interruptions in global supply and the expectation that demand will rise in the coming months.

Despite falling U.S. rig counts and weekly decreases in U.S. production, the domestic crude oil market remains well supplied. The latest data from the U.S. EIA shows an increase in both crude oil inventories and gasoline inventories, which should help offset growing demand and keep pump prices relatively low.

A weakening U.S. dollar and expectations that the Fed will increase interest rates is supporting speculations that the global oil market will begin to come into balance sooner than expected. Geopolitical factors are also likely to influence the market in the near team, and attention remains focused on both OPEC and non-OPEC production based on the current glut in global supply.

WTI reached its highest price for 2016 the last week in April as talks of a weakening U.S. dollar, increased demand and falling output surfaced. However, this boost in price was short lived and reports of increased production out of OPEC pushed prices lower to close out the week. At the close of Friday’s formal trading session on the NYMEX, WTI was down 11 cents and settled at $45.92 per barrel.

Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile.