July 03–Gasoline prices in Arkansas have fallen a penny per gallon in the past week, but that probably won’t be the trend for the rest of the summer.
Decreased U.S. oil reserves and increasing U.S. exports, along with OPEC production cuts, sanctions returning to Iran, and higher U.S. demand spell higher gas prices on the horizon. Oh, and hurricane season is here. But for now, things appear “stable,” according to the AAA spokesperson.
“The national gas price average has held fairly steady for the past 10 days, suggesting that U.S. demand is keeping pace with supply and stabilizing summer gas prices,” said Jeanette Casselano, AAA spokesperson. “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.”
According to GasBuddy.com, with a national average of about $2.90, a gallon this will be the highest Independence Day gas prices since 2014, when the national average hit $3.66 per gallon.
The latest AAA Fuel Gauge Report shows this is the first summer driving season in five years that the U.S. saw the largest one-week reduction in crude inventories. It was a 9.9 million-barrel drop. A consistent decline in supplies could spark higher gas prices, AAA adds.
For the nearly 40 million motorists expected to travel this week, they will find prices at the pump 11 cents cheaper than this past Memorial Day holiday though, AAA noted. Although the national average has dropped 10.7 cents per gallon in the last month, it is also 62.5 cents per gallon higher than a year ago.
Prices in Arkansas averaged $2.57 Monday, according to GasBuddy’s survey of 1,826 stations in Arkansas. This compares with the national average that is unchanged versus last week to $2.84 a gallon, according to GasBuddy.
AAA is tracking the following factors that will continue to impact pump prices through the fall:
–Domestic crude inventories: Refinery runs are at an all-time high and exports are at record levels, which impacts supply levels.
–Gasoline demand: The latest Energy Information Administration (EIA) data shows U.S. demand at 9.7 million barrels per day, one of the highest levels of the year, and could hit a new record with Independence Day holiday travel.
–Crude oil prices: Last week, crude oil hit $74 a barrel — its highest level since 2014.
–Geopolitical concerns: Market observers are watching crude production levels in Libya and Venezuela amid economic woes in Venezuela, and details on the Iran sanctions all of which are influencing market prices.
“If U.S. demand remains strong, domestic and global supply decline and crude inventories continue to sell over $70 a barrel, motorists may see the national gas prices average to potentially jump back up to nearly $3 a gallon in coming months,” added Casselano.
Average gasoline prices on July 2 in Arkansas have ranged widely over the last five years: $1.99 in 2017; $2.04 in 2016; $2.48 in 2015; $3.45 in 2014; and $3.28 in 2013.
“Going into the July 4 holiday, I can’t remember the last time oil markets were so active,” wrote Patrick DeHaan, head of petroleum analysis for GasBuddy. “Oil has surged over 10 percent just in time for summer’s busiest travel holiday, costing motorists over $1 billion more than last year. All the ingredients exist for the national average to inch closer to $3 per gallon, just in time for the second half of the summer.”
DeHaan also pointed out hurricane season is open, adding more guesswork to where gas prices might spend the second half of the summer.
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