Rising Fuel Costs

Gas Prices: AAA’s Fuel Gauge Report | March 10, 2014

Michael Green(WASHINGTON, March 10, 2014) Today’s national average price at the pump is $3.49 per gallon, which is the highest price in nearly six months. This price is three cents more expensive than one week ago and 22 cents more than one month ago; however national prices are still 21 cents per gallon less than the same date last year.  The national average continues to steadily climb and has now increased on 31 straight days and jumped 22 cents during this span. This is the longest streak of daily increases since January 17-February 22 of last year when the national average surged 49 cents in 36 days.

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While pump prices are creeping higher, AAA expects prices to peak between $3.55 and $3.75 per gallon over the next month due to seasonal refinery maintenance and the May 1 required switchover for producing summer-blend gasoline.  This predication comes with the necessary caveat that an unexpected market-moving event, such as unplanned domestic refinery maintenance or further escalation of geopolitical tensions with Russia, could cause prices to exceed this predication.  In 2011 the national average peaked at $3.98 per gallon on May 5.  In 2012 the national average peaked at $3.94 per gallon on April 5. In 2013 prices peaked at $3.79 on February 27, which was the earliest peak on record.

Prices in nearly every state have moved higher over the last week.  Prices in 15 states have increased by at least a nickel, led by nine-cent increases in Kansas, Iowa and Missouri.  While drivers in three states – Indiana (+4 cents), Colorado (+4 cents) and Wyoming (+6 cents) – are paying slightly more than one year ago, the vast majority of motorists are enjoying substantial year-over-year savings.  Prices in 40 states are at least a dime less expensive and prices in 18 states are at least a quarter less expensive.  The largest yearly discount is 45 cents in Washington, D.C.

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Rapidly escalating tensions in Ukraine pressured West Texas Intermediate (WTI) crude oil prices to a more than six-month high last Monday.  However, crude oil prices dropped during the week as the situation stabilized, resulting in a more than three-dollar per barrel drop by midweek.  Market watchers will continue to monitor the Russian-Ukrainian conflict closely and the associated geopolitical tensions are likely to keep oil prices from falling too far.

Crude prices declined again today, however the catalyst was bearish economic data from China over the weekend rather than any further easing of tensions with Russia.  As the second largest economy in the world, a weaker than anticipated Chinese economy would be expected to consume less crude oil, which puts downward pressure on global crude prices.  At the close of today’s formal trading on the NYMEX WTI settled down $1.46 at $101.12 per barrel.

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