Multiple Reasons Behind Rapid Rise of Gas Prices

May 23, 2018

 

AAA is warning motorists to expect to pay more for regular unleaded gasoline this summer.

“AAA predicts that the national average may reach $3 a gallon this summer, especially if crude oil prices continue to increase,” said AAA spokeswoman Jeanette Casselano.

That prediction may actually be optimistic. It could happen this spring.

Summer doesn’t officially arrive until June 21. According to an AAA report issued on Monday, the average price for a gallon of gas across the U.S. was $2.87. More importantly, that average price had jumped 6 cents from the week before. If that rate of increase continues, motorists will be shelling out three bucks for a gallon gas well before the solstice.

The last time the average national price per gallon of regular was above $3 was 2014.

The price of a gallon of gas is up 16 cents from a month ago and 53 cents from a year ago. Why?

Casselano pinned the latest jump, at least in part, to the Trump administration’s decision to re-impose sanctions on Iran. She also factored in growing global demand, shrinking supply and the switchover to summer blend.

There are numerous reasons to expect gasoline prices to continue their upward spike. Troubles in the Middle East, for one, typically force price increases.

The price of oil is rising. A barrel of Brent crude surpassed the $79 mark on Tuesday, the first time in 3½ years. Uncertainty in the Middle East is one reason. But falling Venezuelan production, the prospect of a June 22 meeting of OPEC where a possible 10-to-20-year agreement between Russia and the cartel to create a floor of $80 a barrel under oil, and increased demand in China are also helping push prices higher.

Finally, the summer driving season is right around the corner, and most people consider the long Memorial Day weekend as the summer kickoff. Summer demand typically pushes up gasoline prices.

AAA is predicting more than 41.5 million people will take to their cars this Memorial Day weekend, nearly 5 percent more than last year and the most in more than a dozen years.  —R.M. 

 

 

 

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