Higher gas prices are the new normal

The average retail price for a gallon of gas is more than 30 cents higher than it was on this date last year.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  March 27, 2018 at 7:50 AM
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March 27 (UPI) -- The beginning of spring and a big spike in crude oil prices means U.S. consumers are paying more for gasoline and should get used to it, analysts said.

Motor club AAA reports a national average retail price of $2.62 for a gallon of regular unleaded gasoline, a 2.5 percent jump from last week. That increase followed a spike in crude oil prices last week of nearly 8 percent, driven by tensions in the Middle East and concerns that U.S. President Donald Trump will upend the nuclear deal that lets Iranian oil flow through the European market.

The Organization of Petroleum Exporting Countries, of which Iran is a member, is limiting production to erase a market surplus that pushed oil prices to historic lows. With the tighter market, there's little room for the shortages that would come from the Trump decision on Iran, which is expected in May.

The United States is exporting more of its own oil, meanwhile, creating even tighter market conditions.

Jeanette Casselano, a spokeswoman for AAA, said that, with refiners shifting to a summer-blend of gasoline that's more expensive to make, higher gas prices may become the new normal.

"The jump in gas prices is just the beginning for the season," she said in a statement. "AAA forecasts the national gas price average will be as much as $2.70 per gallon this spring and summer."

The national average price for a gallon of gas on this date last year was $2.28 per gallon. The price for Brent crude oil, the global benchmark, is nearly $18 per barrel higher than this date in 2017.

By region, the West Coast is the most expensive in the country, with three states -- California, Oregon and Washington -- holding above $3 per gallon. All markets there saw an increase in the price at the pump, even as gasoline supply levels swelled by almost a half million barrels.

The Great Lakes region, meanwhile, is the most volatile in the country. Michigan led the pack with a 9 cent increase in gas prices, while Ohio was the only state that saw prices dip last week. Gasoline inventories in that market dropped for the second straight week.

Patrick DeHaan, the senior analyst at GasBuddy, said Great Lakes retail prices are close to the highest level in several years.

"As March wraps up, gas prices are going out like a small lion, but there may be a larger lion looming in the weeks ahead," he said in a statement. "The surge at the pump is by no means over just yet."

A mid-March estimate from the federal government showed gasoline demand across the U.S. economy is at a point not usually seen until summer months, when more vacationers hit the road.

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