more at the pump than they have in years.
Prices could rise even higher just as drivers hit the road for
summer, in terms of average gas prices, will likely be the highest
since 2014,” said Patrick DeHaan, petroleum analyst at GasBuddy, a
fuel-tracking app. “There’s been very little question about that.”
prices have jumped thanks to continuing production
cuts by major exporters. As a result, gasoline is also
becoming more expensive. According to the U.S. Energy
Information Administration, average regular retail gas prices
reached $2.70 a gallon last week—the highest level since 2015.
higher fuel prices could herald an end to the
glut that has plagued the energy market since
2014, they also threaten to dampen demand and hit consumers in
the Organization of the Petroleum Exporting Countries and other
major oil producers, including Russia, agreed to collectively
limit output two years ago, U.S. oil
futures have risen about 40%, closing at
$62.06 a barrel on Friday. Gasoline futures are up 8.6% this
we’re seeing now at the pump is reflective of OPEC’s decision in
2016 to cut back on oil production,” said Mr. DeHaan.
of gasoline’s price increase has also been seasonal, as refiners
tend to process less crude oil into fuel during maintenance and
are starting to transition to summer-grade gasoline, which is
more expensive to make. Prices will likely climb further as the
weather warms and driving picks up, according to energy
cuts have helped offset growing output
from U.S. shale, which has repeatedly reached new record weekly
highs this year. In January, U.S. crude stockpiles fell to the
lowest level since 2015, and are below the five-year average, a
closely watched measure of excess supply. Analysts expect global
crude inventories to fall to their five-year average this year
as well. Gasoline stockpiles have fallen for five consecutive
weeks, according to EIA data ended March 30.
recent months, the U.S. has also exported
record amounts of gasoline, mostly to Latin and South
America. In January, exports totaled more than 33 million
barrels, near an all-time monthly high set in November.
a big difference from a decade ago, or even a few years ago,”
said Tom Kloza, global head of energy analysis at the Oil Price
Information Service. “We’re kind of refiners to the entire
Western Hemisphere right now.”
global demand has kept oil prices lifted, as synchronized
economic expansion has contributed to increased fuel
an April note, Goldman
Sachs analysts said January oil demand
exceeded expectations by 1 million barrels a day, mainly on the
back of strong gasoline and distillate demand growth. According
to the report, gasoline demand was up 2.8% compared with last
January, despite several winter storms that could have crimped
the need for gas.
gas consumption could take a hit if economic growth slows,
analysts said. Global markets have been rattled in recent weeks
by tariffs lobbed back
and forth between the U.S. and China, stoking concern that
an escalation could lead to an all-out trade war between the two
gas prices also have the potential to dent U.S. demand, if
consumers opt to drive less.
rise of the use of the word ‘staycation’ is probably going to
happen this summer. You may start to see some people that are
turned off to higher prices,” said Mr. DeHaan.
analysts are skeptical that the recent rally is enough to make a
sizable impact on the U.S. economy. While gas prices will be
higher than years prior, they are still a far cry from 2014,
when average prices were as high as $3.70 a gallon.
rates are very favorable, incomes are rising,“ said Robert
Campbell, an analyst at Energy Aspects. Gasoline prices “are not
at the point where we think it starts to push demand over.”