Gasoline prices are on the rise and could hit $4 on average at the national level as early as March, GasBuddy's Patrick DeHaan told UPI. File photo by Bill Greenblatt/UPI | License Photo
Jan. 27 (UPI) -- Consumer-level spending in the U.S. economy took a hit in December and more frustrations could emerge as the price at the pump continues to rise, analysts said.
Motor club AAA listed a national average retail price of $3.50 for a gallon of regular unleaded gasoline on Friday, 11 cents higher than week-ago levels, 40 cents higher than this time last month and 16 cents higher than this time in 2022.
Prices moved closer to the $3 level just in time for the busy holiday travel season and resilient demand since then continues to support elevated prices for gasoline at the retail level. Refiners, meanwhile, are reaping the benefits of higher prices, which supports higher crude oil prices.
It's crude oil prices that account for the bulk of what consumers see at the pump. The price for Brent crude oil, the global benchmark, is up 3% since Jan. 16 and, at close to $89 per barrel, is trading at highs not seen since the middle of November.
AAA attributed the increase to resilient demand, supported so far by a mild winter.
"Rising gas demand and elevated oil prices have contributed to higher pump prices," it said. "If demand remains robust, drivers will likely see pump prices increase through the weekend."
A sharper pinch is on the horizon given expectations for a busier-than-normal seasonal period of maintenance for the nation's refineries. On top of that, refiners need to start taking the steps necessary to make a summer blend of gasoline, which is more expensive to make because of the additional processing steps needed to keep it from evaporating in warmer months.
Barring a black swan event in global commodities, it's unlikely that consumer-level prices will hit the $5 mark from last summer, though $4 per gallon is certainly in the cards.
Patrick DeHaan, the senior petroleum analyst at Chicago-based GasBuddy, told UPI that $4 could show up at the pump as soon as March given expectations for a busy refinery maintenance season.
California and Washington are already at the $4 mark and no state in the nation has an average below $3 per gallon. Texas has the lowest price in the country at $3.14 per gallon.
The average for the year, however, is expected to be lower than 2022. The federal government expects an average of $3.32 per gallon this year, compared with $3.97 for 2022.
Higher prices nonetheless are contributing to high inflation, which is down from double-digit levels last year, but still a concern. Consumer spending in December turned south after support from the sales during the holiday shopping season ended.