Get ready for big swings in U.S. gas prices

AAA warns that higher crude oil prices and geopolitical concerns could push the retail price for gasoline higher, even with pledges from OPEC of more production.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  July 3, 2018 at 7:50 AM
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July 3 (UPI) -- U.S. retail gas prices headed into the Independence Day holiday are the highest they've been in four years and may spike further alongside oil, an analyst said.

Motor club AAA reported a national average retail price of $2.86 for a gallon of regular unleaded gasoline for Tuesday. That's relatively stable since last week, but marks the highest price for the July 4 holiday season in four years.

The price for gas was around $2.85 on average nationally last week, signaling some stabilization given the relatively even split between supply and demand.

"However, elevated crude oil prices and other geopolitical concerns could tilt gas prices more expensive in the early fall despite an expected increase in global crude production from OPEC and its partners," AAA spokeswoman Jeanette Casselano said in a statement.

The Organization of Petroleum Exporting Countries in late June agreed to put more oil on the market in the second half of the year to offset chronic supply shortages from Venezuela, the loss of Libyan oil to conflict and the potential loss of Iranian barrels in November. The pledged amount was short of the expected deficit and U.S. President Donald Trump spent the weekend calling for more oil from Saudi Arabia.

Fears of a deficit have supported the price of oil in recent days. The price for Brent crude oil, the global benchmark influencing the price at the pump, was up more than 1 percent in early Tuesday trading.

This holiday, however, is less than the near-$3 per gallon gas for Memorial Day weekend.

By region, the West Coast is the most expensive in the country with Arizona setting the low-water market at $3.02 per gallon. The amount of gasoline in that market is about 1.7 million barrels higher than this time last year, keeping prices there stable.

The Great Lakes market, meanwhile, is the most volatile, with Ohio prices jumping 11 cents per gallon from last week. Ohio gas prices are relatively cheap, however, at $2.77 per gallon, while Michigan makes another run toward the $3 per gallon mark. Gasoline inventory levels in that region are relatively stable, but Patrick DeHaan of GasBuddy said Great Lakes market swings are a sign of things to come at the national level.

"Be ready for volatility and likely higher prices at the pump in July and August," he said in a separate statement.

The national average for a gallon of gas on this date last year was $2.23.

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