Energy

Gas Prices Surge Into the Spring, Increases Costs $135 Million a Day

Douglas A. McIntyre

Published: March 20, 2019 6:50 am

Last Updated: January 11, 2020 9:49 am

After a prolonged period during which gasoline prices stayed at relatively low levels, they have started to surge as the calendar moves into spring and toward Memorial Day. The current price of an average gallon of regular gas nationwide is up $0.35 in the past six weeks. This has increased what drivers pay across the entire country by $135 million a day compared with the start of the year, according to a new analysis.

According to gas price research company GasBuddy, the average price of a gallon of regular gas has reached $2.58, which is the highest price since November. The firm says that the twin causes are “seasonal changes,” which have to do with how often people drive as the weather warms, and changes in refinery capacity. Spring is traditionally the period when refineries do repairs and maintenance. State gas taxes are also a factor. There is a very wide swing between the states with the highest and lowest gas taxes.

Oil prices are generally the culprit when gas prices rise. In this rare case, they are not entirely the cause. Crude has only increased modestly from $57.26 a barrel three weeks ago to $58.87. The prices have seesawed modestly as cuts in production by OPEC have been counterbalanced by the production from huge U.S. and Canadian shale. America is now, by several measures, the largest oil producer in the world. It is a distinction the country has not held for decades.

A GasBuddy analyst commented that the recent situation may get worse. Patrick DeHaan, head of petroleum analysis at GasBuddy, said: “The news doesn’t get much better either: motorists can expect the jumps at the pump to continue into April, and perhaps even lasting up to Memorial Day, when the transition to summer gasoline and refinery maintenance have generally wrapped up.” He added that excess inventory in some states has been exhausted, or will be soon.

The price increases hardly have been even across the United States. The Midwest has taken the brunt of the price increases. The rise in the average price of a gallon of regular in Michigan was the largest nationwide, up $0.75 per gallon from a 2019 low. This was just ahead of Ohio, higher by $0.67; Illinois, higher by $0.64; Indiana, higher by $0.59; and Wisconsin, up by $0.54. At the other end of the spectrum, the price of gas in Alaska is up only $0.06 over the same period.

Looking forward at demand, Memorial Day is one of the most heavily traveled periods of the year. Last year, almost 37 million Americans traveled by car. This demand usually pushes up prices in late May and early June. None of this is likely to change the fact that, as the holiday comes around, the worst cities to drive in almost every state will not be helped by whether or not prices rise.

24/7 Wall St.
4 Energy Stocks to Buy With at Least 60% Implied Upside

Increase in Average Gas Price From 2019 Low ($/gal)