American Drivers Won't Pay Much More at the Pump This SummerBy
Prices to average $2.46 a gallon this summer, EIA says
Gasoline consumption flattening after last year’s record
American drivers paying the the most for gasoline since 2015 can take some comfort from forecasts that prices don’t have much further to rise.
Regular gasoline averaged $2.42 a gallon Monday, according to the Energy Information Administration. While prices are 35 cents higher than a year ago, they’re just 4 cents below the agency’s forecast average for the summer.
“Oil prices have been relatively range bound and it’s been a quiet maintenance season, so it’s been quiet at the pump,” said Patrick DeHaan, senior petroleum analyst for GasBuddy, a price tracker based in Boston. Prices will only become volatile if “something large disrupts the flow of oil somewhere and oil prices and thus gas prices rise proportionally.”
The EIA in its Summer Fuels Outlook sees prices averaging 23 cents higher this summer than a year earlier, primarily because Brent crude oil is forecast to be $8 a barrel more than in the summer of 2016.
The higher prices may keep a lid on demand. This summer, gasoline consumption is expected to increase just 24,000 barrels a day from last year’s record. That compares with a gain of 125,000 in the summer of 2016.
“Last year, Americans were taking the road trips they had delayed during the era of higher prices,” DeHaan said by telephone. “There is lower demand this year because of the pent-up demand we saw last year.”
Higher retail gasoline prices could be contributing to flattening demand, too, DeHaan said.
“Demand is purely price-based, and higher anticipated prices will likely lead to gasoline demand that is lower than last year or basically flat,” he said.
Supply is likely to increase as refiners return from seasonal maintenance. Over the past five years, refiners nationwide have increased the amount of crude and other feedstocks they processed by an average of 1 million barrels a day from April through July.
“Usually gas prices between mid-February and Memorial Day increase somewhere from 25 cents to 70 cents,” DeHaan said. “But this year we may not even see a point where gas prices get up to a 35-cent increase because utilization is already looking good and most refinery maintenance has peaked, so that is good news for motorists.”