Prepare to Pay More For Gas As Summer Approaches
NEW YORK ( MainStreet) Gasoline prices have experienced an uptick recently but will continue to edge up slightly as summer approaches, industry experts said.
Prices at gas pumps across the country are averaging $3.60 a gallon as temperatures rose slightly in some regions.
Gasbuddy.com found that gas reached $3.60 a gallon in many states. Marked exceptions on the low-end were Montana, where gasoline prices were $3.27 a gallon, and Texas, where gas was $3.47 a gallon. By contrast, California had gas as high as $4.17 in California, and Hawaii hit $4.28 a gallon.
Regular gasoline retail prices will continue to stay within this range and is projected to reach an average of $3.57 per gallon overall during the period of April through September, the Energy Information Administration said. The annual average regular gasoline retail price was $3.58 per gallon in 2013.
The projected national average regular retail gasoline price falls from $3.66 per gallon in May to $3.46 per gallon in September. The EIA expects regular gasoline retail prices to average $3.45 per gallon in 2014 and $3.37 per gallon in 2015, compared with $3.51 per gallon in 2013.
"After rising into May, the retail price is expected to fall through the remainder of the summer because both crude oil prices and gasoline crack spreads (the difference between wholesale product price and the price of crude oil) decline," the EIA said in its report. "Daily and weekly national average prices can differ significantly from monthly and seasonal averages and there are also significant regional differences, with prices in some areas exceeding the national average by 25 cents per gallon or more."
Crude oil prices have increased recently because of the geopolitical tensions in the Ukraine and Russia, said Rob Desai, an energy analyst for Edward Jones in St. Louis. The political issues should not have a long-term effect because the temporary spike was related only to the perception of risk, he said.
"We've seen oil prices move up," he said. "That is the main reason. If they calm down, we could see oil prices move lower and impact gasoline prices. There is nothing artificially keeping them high or low. They're pretty close to where they should be."
Most consumers are paying an average of $3.60 a gallon, which breaks down to include an average of $2.60 for crude oil, $0.60 for the refiners and distributors and $0.40 for taxes, Desai said.
"There is some risk built into the price," he said. "The perception of risk is a driver in gasoline prices and that is why we are feeling it at the pump. It doesn't really affect the U.S. since it is such a global commodity."
The U.S. generally produces 7% of the world's crude oil, while Saudi Arabia produces 12%, followed by Russia which generated 10% to 11%, Desai said. While those amounts vary each month, that has been the typical average.