High demand, high oil prices mean pain at the pump

Jan. 30 (UPI) -- Higher crude oil prices and an increase in consumer demand, even during the winter, means higher prices for gasoline, retail sector analysis finds.

Motor club AAA reports a national average retail price of $2.59 for a gallon of regular unleaded gasoline on Tuesday, about a penny more than Monday and 10 cents higher than one month ago. Only a handful of states saw the price at the pump decline last week.

Jeanette Casselano, a spokeswoman for AAA, said consumer demand has been surprisingly strong for January as winter months usually decrease the appetite for heavy post-holiday travel, but a rally in crude oil prices that lasted almost the entire month doesn't help either.

"Crude oil has been selling at very expensive rates the past few months," she said in a statement. "Those higher market prices are now trickling over to consumers at the pump."

Crude oil prices started the week in a tailspin, but jumped 5.5 percent, or $3.70 per barrel, over the span of the first eight trading days in January, according to U.S. federal data. In its weekly report, the U.S. Energy Information Administration said the level of oil stockpiles in the country dropped enough to push the level to its lowest point in three years, even as production continues to soar.

More U.S. oil is leaving the country as exports.

By market, the West Coast remains the most expensive in the country, with California taking top honors in the Lower 48 with a state average price of $3.28 per gallon, supported in part by a new fuels tax that went into effect last year. For that region, AAA said refineries were actually behind the ball and, as a result, gasoline inventories are lower than normal.

The Great Lakes region, meanwhile, is the most volatile. Illinois is tops in the region at $2.63 per gallon, while Ohio has a state average about 20 cents per gallon lower. The market as a whole might see some relief, provided the concentration of refineries can keep up, as federal data show gasoline inventories at their highest level since June.

Federal data show the average retail price for a gallon of regular unleaded gasoline was $2.42 last year and should be about 15 cents per gallon higher for all of 2018.