Gas prices expected to hit 7 year high this summer

WASHINGTON, D.C. — According to a release by AAA, the national gas price average has increased 40% since the start of the year, from $2.25 on January 1 to $3.13 today. Moreover, it is not stopping there. Motorists can expect gas prices to increase another 10–20 cents through the end of August, bringing the national average well over $3.25 this summer.

“Robust gasoline demand and more expensive crude oil prices are pushing gas prices higher,” said Jeanette McGee, AAA spokesperson. “We had hoped that global crude production increases would bring some relief at the pump this month, but weekend OPEC negotiations fell through with no agreement reached. As a result, crude prices are set to surge to a seven year-high.”

Getting truck drivers to be able to deliver the gas as fast as the demand calls for has also been an issue.

The last time crude was more than $76.40 and the national average gas price was at $3.25 was November and October 2014, respectively. Prices for crude will exceed this threshold as early as today, according to AAA, and gas prices will follow suit in coming weeks, paving the way for a very expensive peak driving season.

AAA states that the latest weekly report from the Energy Information Administration shows that gasoline demand remains robust at 9.1 million b/d, despite a weekly decrease. EIA reports that gasoline stocks increased by 1.5 million bbl to 241 million bbl last week. Since last Monday, the national average increased four cents and is more expensive on the month (+8 cents) and the year (+95 cents).

As the market watches crude prices increase this week, the U.S. will be watching Tropical Storm Elsa. While the storm is weakening and will avoid interruptions to Gulf Coast crude and gasoline production, it is expected to bring storm surge and possible flooding to parts of Florida, Georgia and South Carolina.