Jared Hunt: Gas prices may have topped out for spring
Cross your fingers: we may have seen the peak for gas prices this year.
After increasing about 40 cents a gallon since the beginning of the year, local gas prices might be topping out in the $3.75 to $3.79 range, based on the latest outlooks from two key price-tracking firms.
Both AAA and online firm GasBuddy.com have written in the last week that the annual spring ramp-up in prices might have reached its peak.
“U.S. gasoline prices most likely hit their spring 2014 peak on April 29 at $3.658 gal and many states are likely to see pump prices ease to where motorists pay a bit less than what they paid last Memorial Day weekend,” GasBuddy analyst Patrick DeHaan wrote in a Monday blog post.
The same day, AAA announced nationwide gas prices might have hit their springtime peak at $3.70 last week. But it hedged a little bit, saying, “it is too early to know for certain.”
AAA said Monday that after increasing for 77 of 80 days, the national average for gas had fallen for seven straight days — the longest stretch since January.
In West Virginia, the statewide average for regular unleaded stood at $3.75 even Wednesday, down a smidge from the $3.751 average logged by AAA on Tuesday. (A small victory, but victory nonetheless.)
The spring swing in gas prices is nothing unexpected.
Every year refineries have to retool from the so-called “winter blend” of gas to the cleaner burning “summer blend.” Because summer blend formulations vary region-by-region (due to different air quality regulations in different parts of the country), this can sometimes lead to complications and bottlenecks in the gas supply stream.
If refineries have unexpected shutdowns or maintenance takes longer than expected, it can cut supply and lead to gas price pops in some areas. That puts upward pressure on prices across the country.
GasBuddy reported April was an expensive month for drivers, with about $37.2 billion spent on motor fuel. That was up slightly from the $36.3 billion spent in March, and $11.7 billion more than what was paid last April.
But all signs seem to indicate those pressures have begun to abate.
GasBuddy reported all U.S. gasoline distribution terminals have transitioned from winter to summer blends and about 90 percent of spring refinery maintenance has been successfully completed.
AAA added that domestic crude oil inventories are beginning to build, with data from the U.S. Energy Information Association showing stockpiles at an all-time high.
With flush crude supplies and refineries coming back online, it means gasoline stockpiles can begin to build ahead of the Memorial Day holiday weekend — the traditional start of the summer driving season.
The EIA reported Wednesday U.S. gasoline inventories increased by 1.6 million barrels over the past week to 213.2 million barrels.
But — as always — there are still risks to the market.
The tensions brewing in Russian and Ukrainian forces has kept crude oil prices elevated in recent weeks, and that situation doesn’t appear to be calming anytime soon. A derecho, hurricane or other storm could take out some refinery or distribution capacity, too.
But — again, fingers crossed — if all goes well, we should start seeing some relief at the pump soon.
How much? That will be even harder to predict.
GasBuddy said prices in the Great Plains and Great Lakes regions will likely drift lower over time. It said some southeastern states could drop as low as $3.25 a gallon. (Though West Virginia usually stays higher than its southern counterparts.) GasBuddy predicts the smallest drop will occur in the northeast, where supplies will be tighter due to less availability of imports.
All of those regional factors could affect where West Virginia’s prices go, as the state seems to be at a crossroads between the Midwest, South and Northeast.
No matter how far it drops though, I think we can all agree that any decline is welcome.