President Joe Biden said recent declines in retail gasoline prices made a big dent in overall inflation, though the price at the pump is expected to increase over the coming weeks and months. Photo by Al Drago/UPI | License Photo
Jan. 13 (UPI) -- Retail gasoline prices in the United States, the world's leading economy, are stuck in something of a holding pattern, though refinery maintenance and an expected increase in crude oil prices should push prices higher.
Motor club AAA lists a national average retail price of $3.29 for a gallon of regular unleaded gasoline for Friday, unchanged from this time last week and only a penny less than year-ago levels.
Gasoline prices touched $5 per gallon last summer as the global energy sector buckled under the strains of the geopolitical premium from the war in Ukraine. But a move away from Russian supplies and toward the likes of the United States and Norway has since brought crude oil prices lower.
Crude oil prices account for the bulk of what consumers see at the pump and those prices too are below the $100 level that gripped markets during much of the 2022 summer. The price for Brent crude oil, the global benchmark, is now around $80 per barrel.
That's been a relief to consumers struggling with higher food prices and rents. Inflation over the 12-month period ending in December came in at 6.5%, the smallest increase since the year ending in October 2021.
Double-digit, year-on-year growth is still evident in the prices for food, energy and transportation, though it was the energy component of the Consumer Price Index that helped contribute to recent declines.
The biggest reason, U.S. President Joe Biden said, was because of the steady decline in prices at the pump.
"Gas is down more than $1.70 from its peak," he said. "And that adds up to a family with -- a typical family with two vehicles -- to a savings of $180 a month, every single month, that stays in their pockets instead of being spent at the pump."
But while lower than peak levels, both crude oil and retail gasoline prices are on the rise. Brent dropped to the mid-$70 range during the first week of January and many analysts expect crude oil prices to hit triple digits relatively soon due to resurgent demand in China, the world's second-largest economy behind the United States.
"Gasoline prices will start drifting up again with oil rallying on perceived tightness in supply with the global economy likely to rebound thanks to cooling energy prices and China's reopening," Patrick DeHaan, the senior petroleum analyst at Chicago-based GasBuddy, told UPI.
Later this spring, meanwhile, refiners will start making the summer blend of gasoline, which is more expensive to make because of the additional processing steps necessary to keep it from evaporating in warmer weather.
"In February, the most critical refinery to U.S. gasoline prices -- the Phillips 66 refinery in beautiful Bayway, NJ, will go into a 60-day turnaround," Tom Kloza, the head of the Oil Price Information Service, said. "We may get the dress rehearsal for the retail gasoline price explosion when that happens."
But while it's likely that the national average tops $4 per gallon this summer, consumer-level prices should be lower than last year. The federal government estimates gas prices will average $3.32 this year, down from the $3.97 average for 2022.