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Gas prices are surging, and it could get worse

The average price is at its highest level since 2014

Motorists have probably noticed that it costs more to fill their tanks this spring.

Gasoline prices have risen nearly 13 percent since the beginning of the year, mainly because the price of crude oil has risen sharply. The AAA Fuel Gauge Survey shows the national average price of regular gas is $2.81 a gallon, up five cents from a week ago and 16 cents a gallon higher than a month ago.

While refinery issues are usually responsible for the rise in spring gasoline prices, this year oil prices are the main driver. In the recent past, whenever oil prices began to creep up, a surge in U.S. shale oil production brought them down again.

OPEC cutting production

"This time, the rise in US oil production, while notable, is not enough to offset OPEC and their 14 members production cuts they enacted to start 2017," Patrick DeHaan, GasBuddy's petroleum analyst, told ConsumerAffairs. "Going forward, unless OPEC raises their own production, global supply will continue to be challenged."

But OPEC is unlikely to do that. In 2015, it significantly increased oil production to lower prices and drive U.S. producers out of business. It didn't work. Consumers enjoyed lower prices at the pump and U.S. producers used technology to make their operations profitable, even at lower prices. Oil prices, along with gasoline prices, have been stuck in a lower range ever since.

DeHaan thinks gas prices will get even higher this summer, but maybe not as high as they were a decade ago.

"I’m anticipating a peak just under $3 a gallon, perhaps $2.85-$2.97, but this could shift even in a month if global demand remains strong," he said.

U.S. increases oil exports

U.S. oil producers, meanwhile, are sending more of their product outside the country. The Energy Information Administration reports crude oil exports surged to more than 2.3 million barrels a day in mid-April, the highest weekly exports on record.

The U.S. exports are adding to the world oil output, which has contracted through OPEC cuts and political and economic turmoil in Venezuela, which has significantly reduced that country's production.

The price in oil prices has hit California particularly hard. It's tied with Hawaii for the highest average gasoline prices in the U.S. at $3.61 a gallon. Seven other states have statewide averages higher than $3 a gallon.

Oklahoma and Arkansas have the cheapest gasoline in the nation, with statewide average of $2.51 a gallon.

Motorists have probably noticed that it costs more to fill their tanks this spring.Gasoline prices have risen nearly 13 percent since the beginning of...

Gasoline prices remain stable despite rising oil prices

Analysts say refiners have been unusually busy

Oil prices have started 2018 hitting their highest levels since 2014. The price of West Texas Intermediate crude is hovering between $63 and $64 a barrel.

Normally, gasoline prices follow the price of crude higher, but that hasn't happened so far. The AAA Fuel Gauge Survey shows the average price of regular gasoline is $2.49 a gallon, up only a penny in the last week.

Patrick DeHaan, Head of Petroleum Analysis at GasBuddy, says real geopolitical concerns have boosted oil prices, along with data showing oil supplies continue to fall. Normally, he says that would cause gas prices to go up.

"The irony here is that part of the reason for oil inventories declining has been the incredible refinery utilization rates," DeHaan told ConsumerAffairs. “They're churning out products at levels unheard of for winter."

In fact, the normal seasonal trend is to reduce production of gasoline, and in recent years that has pushed prices higher during the winter months. DeHaan says refiners are buying more oil -- boosting the price of crude -- but turning that oil into gasoline. With ample supplies of gasoline, prices consumers pay at the pump are remaining stable.

Surging gasoline inventories

"Oil prices may rise, but since gasoline's relationship to oil isn't direct, it may not be completely mirrored at the pump, given that gasoline inventories have been surging," DeHaan said.

AAA reports plentiful supplies have brought down retail gasoline prices in a handful of states over the last week. Regular gas is 10 cents a gallon cheaper in Indiana, seven cents cheaper in Ohio, and six cents cheaper in Michigan.

“On average, gas prices are 12 cents more expensive than a year ago. However, on the week, consumer demand for gasoline decreased. If this continues, gas prices will decrease in the weeks ahead,” said AAA spokesperson Jeanette Casselano.

That doesn't mean motorists won't encounter some price volatility. Across the Great Lakes and Central states, prices have increased as much as six cents and gone down as much as three cents in the last week.

Oil prices have started 2018 hitting their highest levels since 2014. The price of West Texas Intermediate crude is hovering between $63 and $64 a barrel....

Gasoline prices near 2017 highs

Rising oil prices may keep gas prices higher than last year, despite the switch to winter grade fuel

Gasoline prices are moving higher at a time when they normally move lower. The summer driving season is over and refineries are producing cheaper winter gr...

Gas prices falling but still higher than normal

National average price down five cents in the last week

Gasoline prices are drifting lower from their post-Hurricane Harvey spike, but remain significantly higher than this time last year.

The AAA Fuel Gauge Survey shows the national average price of regular gasoline is around $2.57 a gallon, down five cents from a week ago but 37 cents higher than fall 2016.

Prices rose quickly after Hurricane Harvey hit the Texas Gulf Coast last month, forcing many refineries to curtail production. That created supply shortages, raising the price of gasoline nationwide. After topping out close to $2.70 a gallon, gasoline prices have been going down over the last two weeks.

"That downward momentum is starting to pick up steam," Gasbuddy senior analyst Patrick DeHaan told ConsumerAffairs. "Gasoline inventories are continuing to recover after hurricanes Harvey and Irma, and that's helping to put downward pressure on gas prices."

Big drop in prices in Delaware

Consumers in some states are seeing gas prices fall faster than the nation as a whole. DeHaan says prices seem to be falling faster in the Midwest and in the East; Delaware leads all states with a decline of around 10 cents a gallon in the last week.

Prices remain higher than normal in the Southeast, which normally enjoys some of the lowest fuel prices in the nation.

"We're still seeing some supply problems as a result of that temporary partial shutdown of the Colonial Pipeline after Hurricane Harvey," DeHaan said. "We're still getting back on our feet in the Southeast."

Both Florida and Georgia have statewide gas price averages of $2.66 a gallon, the highest in the region. But inventory issues are still affecting prices in the Carolinas, Tennessee, and Virginia.

South Carolina, normally the state with the cheapest fuel, has a current statewide average gasoline price of $2.46 a gallon. A month ago (before Hurricane Harvey), it was $2.07. Tennessee's average price of $2.50 a gallon is still 37 cents higher than a month ago.

Most expensive gas is in the West

In the West, California has the most expensive gasoline. The statewide average for regular is $3.12 a gallon -- but it's 13 cents higher at San Francisco area gas stations.

Hawaii and Washington are seeing slightly lower gas prices this week and are the only states besides California where the average price has eclipsed the $3 per gallon mark.

Autumn is normally a time when gasoline prices fall a bit faster, since oil refineries have switched to producing cheaper winter-grade gasoline.

The EPA requires stations to sell summer blends between June 1 and September 15, but it has allowed earlier sale of winter grades because of the hurricanes. That may have helped bring down prices a bit, but DeHaan says there are other economic forces at work that may limit the benefit to consumers.

"Oil prices are now $51 a barrel, so gasoline prices may not get as low as they were before the hurricanes, when oil was selling for around $47," he said.

Gasoline prices are drifting lower from their post-Hurricane Harvey spike, but remain significantly higher than this time last year.The AAA Fuel Gauge...

Gas prices stabilize after Harvey spike

The average price has drifted lower over the last three days

After Hurricane Harvey devastated the Texas Gulf Coast, interrupting gasoline supplies from some of the area's refineries, gasoline prices surged, especially in the southeastern states.

But over the last three days, AAA's national average price of regular has actually gone down by a fraction of a cent per day, suggesting prices have leveled off, at least for now.

The national average price of regular today is $2.66 a gallon, down about a penny over the last three days. It's up more than 30 cents a gallon from a month ago, however.

Curtailed 25% of production

At its worst, Harvey forced about a quarter of the Texas Gulf Coast refineries offline. That reduction in output forced Colonial Pipeline, a major supplier of fuel to the Southeast and Mid-Atlantic states, to shut down its lines running from Texas to Louisiana.

By last week, both lines were back up and moving fuel, and consumers in many states are beginning to see prices end their steady rise.

Florida, now being affected by Hurricane Irma, saw its average retail gasoline price jump 44 cents a gallon in the last month, with supply now being a major issue. A large number of Florida gas stations have run out of fuel in the last week as residents gassed up to evacuate. But even in Florida, AAA reports the average price dropped nearly a penny a gallon in the last 24 hours.

Prices still rising in Georgia

Georgia is bucking the trend of declining fuel prices. The AAA Fuel Gauge survey shows the average price of regular has risen nearly a penny since Sunday.

South Carolina, which until a couple of weeks ago had the cheapest gas prices in the nation, saw the average price rise 45 cents a gallon after Harvey. But even in South Carolina, the average price appears to have now backed off its high of $2.56 a gallon.

The distinction of cheapest gas in America now belongs to Oklahoma. The statewide average of regular is about $2.35 a gallon and slowly falling.

The question many consumers may be asking is when prices will get back to their pre-Harvey levels. That's hard to say, but from all appearances the process has begun.

After Hurricane Harvey devastated the Texas Gulf Coast, interrupting gasoline supplies from some of the area's refineries, gasoline prices surged, especial...

Gas price rise slows as more fuel flows from Texas

National average price is up just a penny a gallon in 24 hours

After a series of dramatic daily spikes in gas prices since Hurricane Harvey hit the Texas Gulf Coast, prices at the pump seem to have leveled off.

The AAA Fuel Gauge Survey shows the national average price of regular rose just a penny a gallon in the last 24 hours, to nearly $2.65 a gallon. The price of premium rose two cents to $3.11, while the average price of diesel rose about a penny to $2.67.

Colonial Pipeline has announced that Line 2, which carries diesel fuel from Texas to the East Coast, restarted on Sunday. The company said it is on schedule to restart Line 1, which carries gasoline, later today.

"We have been working diligently and expeditiously to complete the repair work and restore service following Hurricane Harvey and the unprecedented flooding in the Gulf Coast last week," the company said in a statement.

More refineries back online

Fuel has continued to flow in Line 1 from Lake Charles, La., to points east, but the company had to shut down the segment of the pipeline from Port Arthur, Tex., to Lake Charles after the storm because so many refineries were offline. Over the long Labor Day holiday, more came back online.

Valero Energy reports its Corpus Christi and Texas City refineries are back producing gasoline at pre-hurricane rates.

"Three Rivers continues to ramp up operations and Houston will increase rates as transportation and logistics infrastructure becomes more available," the company said in a statement. "Port Arthur is in final stages of refinery assessment and making preparations to resume operations."

Andy Lipow, president of Lipow Oil Associates LLC in Houston, told Bloomberg News that while a lot of gasoline production has come back online, there is still a significant amount in the Houston-Beaumont-Port Arthur that is down.

Futures market will determine price at the pump

How quickly the price of gasoline returns to normal levels would appear to be up to market traders, whose purchase of gasoline futures influences the wholesale price of fuel. On Monday, gasoline futures dropped more than 3% to their lowest level in more than a week as traders believed supplies were being restored to the market at a faster-than-expected pace.

Regional price spikes, meanwhile, are mostly caused by supply interruptions. Gasoline prices today are much higher than normal in several Southeastern states like South Carolina, Georgia, and Tennessee.

Price increases have been much less dramatic in other parts of the country that are less dependent on fuel from the Texas Gulf Coast.

After a series of dramatic daily spikes in gas prices since Hurricane Harvey hit the Texas Gulf Coast, prices at the pump seem to have leveled off.The...

Labor Day gas prices the highest in two years

National average price jumped seven cents a gallon in 24 hours

With refineries offline and a major pipeline largely shut down, gasoline prices are soaring, meaning Labor Day travel may be a little more expensive.

According to AAA, the national average price of regular gas jumped seven cents a gallon in the last 24 hours to $2.51. The average price of premium rose four cents to $2.97. The average price of diesel is $2.59 a gallon, about three cents higher than Thursday.

Some of the sharpest increases are in the Southeast. According to Gasbuddy senior analyst Patrick DeHaan, among the top 25 markets registering the sharpest one week rise in prices at the pump, five are in South Carolina, usually the lowest priced state in the U.S. when it comes to gasoline.

The average price rose nearly 38 cents a gallon in Greenville. It's up 30 cents in Spartanburg and Rock Hill, nearly 25 cents in Columbia, and 23 cents in Myrtle Beach. Nationally, gas prices are up around 16 cents a gallon, according to AAA.

Tight supplies

The issue, of course, is supply. Flooding from Hurricane Harvey forced several major Gulf Coast refineries to suspend production, reducing the flow of gasoline from this major refining area by 25%.

The bottleneck forced Colonial Pipeline, a major supplier to the Southeast and East Coast to shut down shipments from Houston. That leaves wholesalers scrambling for supply and having to pay more for it. DeHaan says gasoline will likely get even more expensive, rising as much as another 20 cents a gallon next week.

Meanwhile, fuel was in short supply closer to the storm zone -- in part because of supply disruptions and in part because of storm damage. As a result there were long lines reported at some stations that were still selling fuel.

Colonial, meanwhile, has been shipping fuel from Lake Charles, La., and said it hopes to resume shipments from the Texas Gulf Coast as early as Sunday.

Highest prices still in the West

Consumers who plan to be on the road over the Labor Day weekend will encounter the highest gasoline prices in the West, though those states have been less impacted by the storm. Prices are rising in the West, but at a much slower pace than in the East.

As of today, here are the states with the lowest gasoline prices:

  • Louisiana ($2.27)
  • Arkansas ($2.28)
  • Mississippi ($2.29)
  • Alabama ($2.30)
  • Arizona ($2.31)

The states with the highest fuel prices are mostly in the West:

  • Hawaii ($3.09)
  • California ($3.03)
  • Washington ($2.96)
  • Alaska ($2.87)
  • Oregon ($2.85)
With refineries offline and a major pipeline largely shut down, gasoline prices are soaring, meaning Labor Day travel may be a little more expensive.Ac...

Gas prices at 2017 high in Harvey's wake

Price escalation will likely extend into the Labor Day weekend

Retail gasoline prices have begun to react in more dramatic fashion to supply interruptions caused by Hurricane Harvey along the Texas Gulf Coast.

The AAA Fuel Gauge Survey shows the national average price of regular gasoline today is $2.40 a gallon, up nearly three cents from the day before and six cents higher than a week ago, before the storm took about 25% of Gulf Coast refineries, producing 2.5 million barrels of gasoline a day, offline.

The national average price of premium gasoline rose more slowly, gaining a penny a gallon from yesterday to $2.90. The price of diesel was largely flat.

Market confusion

The market was confused in the days before and immediately after Harvey made landfall, with gasoline futures rising only about 4% and oil prices actually going down. Analysts said it wasn't clear what impact the storm would have, but most agreed that any price spikes will probably be temporary. However, it could be weeks before all refineries are back to normal operations.

So far this week, the biggest price increases have been in the Southeast, a region that normally enjoys the nation's lowest and most stable fuel prices. According to AAA, the statewide average for regular gas in Texas is about $2.22 a gallon, up about three cents from yesterday and about nine cents higher than a week ago.

Big impact in South Carolina

South Carolina, which normally has the lowest gasoline prices in the U.S., no longer holds that distinction. The statewide average there is $2.18 a gallon, up nearly five cents from the day before and 13 cents more than a week ago.

The average price at the pump in Tennessee is now $2.20 a gallon, up three cents in the last 24 hours and nearly seven cents higher than last week. Price increases have been less dramatic in Mississippi, Alabama, and Arkansas.

West of the Rockies, Harvey is having a much less dramatic impact on fuel prices. However, motorists in the West are paying higher prices this week than last. AAA says the influx of people into the Pacific Northwest last week to view the solar eclipse led to a significant increase in gasoline demand.

When hurricanes Katrina and Rita hit the Gulf of Mexico in late 2005, the national average price of gasoline surged 40 cents a gallon. Few are predicting prices will get that high this time, although the longer the Gulf Coast refineries remain offline, the worse supply shortages will get.

Retail gasoline prices have begun to react in more dramatic fashion to supply interruptions caused by Hurricane Harvey along the Texas Gulf Coast.The A...

Gas prices creep higher as Harvey's impact is assessed

But prices could jump by the end of the week

So far, the U.S. has not seen a huge spike in gasoline prices caused by the supply interruption from the hurricane battered Gulf Coast.

But that could change at any time, experts say.

On Monday the Oil Price Information Service reported that about a quarter of the oil refineries lining the Texas coast were offline, mostly due to flooding from Hurricane Harvey. That works out to about 2.5 million barrels of gasoline a day missing from the supply chain.

Most of that fuel would have eventually been delivered to the southeastern states, where gasoline prices are lowest anyway. A sizable portion would have been exported to South America. Very little would have been used to supply gas stations west of the Rocky Mountains, where gasoline prices are highest.

Only a penny higher than yesterday

The AAA Fuel Gauge Survey shows the national average price of regular gasoline today is $2.37 a gallon, up a penny from Monday and only four cents higher than a week ago. In Texas, the average price of gasoline is $2.19 a gallon, two cents higher than Monday and six cents higher than seven days ago.

In a Tweet, Patrick DeHaan, senior analyst for Gasbuddy, said there could be a surge in the national average fuel price by the end of the week, possibly reaching $2.43 a gallon, which would be the highest level in nearly two years. But DeHaan says predictions of a $1 per gallon spike aren't very realistic.

Still, some motorists are seeing fairly dramatic price increases at some stations. The Baltimore Sun reports some stations in Maryland were posting prices as high as $2.33 a gallon Monday. An AAA spokeswoman was quoted as saying that the prices weren't really justified, since the state is mostly supplied by refineries in neighboring Delaware.

Whatever Harvey's impact on gasoline prices, CNBC predicts it will be temporary. But for right now, there are a lot of unknowns. Experts say major damage to Houston area refineries could be a game-changer, and so far conditions haven't yet allowed a thorough assessment.

So far, the U.S. has not seen a huge spike in gasoline prices caused by the supply interruption from the hurricane battered Gulf Coast.But that could c...

Gas prices up a dime a gallon in the last month

Much of the increase is centered in Midwestern states

Gasoline prices have risen in the last four weeks, pushed higher by a rise in oil prices and a larger than expected drop in gasoline stockpiles.

The AAA Fuel Gauge Survey shows the national average price of self-serve regular is $2.33 a gallon, a dime a gallon higher than a month ago. Half of that increase has come in the last seven days.

The average price of premium gas is $2.85 a gallon, up seven cents in the last month. The average price of diesel fuel is $2.49 a gallon, five cents more than last month.

Midwest leads prices higher

Motorists in Indiana saw prices at the pump surge 26 cents a gallon in the last month. Prices are up 20 cents in Ohio, 17 cents in Michigan, 15 cents in Kentucky, 13 cents in Florida and Oklahoma, and 11 cents in South Carolina and Kansas.

“As summer moves forward, the days of dropping summer gas prices appear to be behind us for now,” said AAA spokesperson Jeanette Casselano. “U.S. crude inventories are moving in the opposite direction of demand – a perfect storm for continued price increases heading into August.”

After flirting with the $40 a barrel mark, oil prices are back around $50 a barrel, increasing the cost of making gasoline. But motorists who have watched the mid-summer rise in prices at the pump probably should not be too concerned. As oil prices get back to $50 a barrel, U.S. production usually increases, bringing prices back down again.

Stable West Coast

West Coast gasoline prices, among the most expensive in the nation, remained stable last week, with the exception of California. AAA says drivers there saw prices jump due to an equipment breakdown at Phillips 66’s Wilmington, Calif., refinery and ongoing planned maintenance at Tesoro’s Golden Eagle Refinery in Martinez.

Even so, the Energy Information Administration (EIA) reports West Coast gasoline inventories actually rose after a significant one-week drop. Prices there should not go much higher.

States with the cheapest gas this week include South Carolina, Alabama, Mississippi, Arkansas, Missouri, Tennessee, Oklahoma, Louisiana, Virginia, and Texas.

States with the most expensive fuel include Hawaii, California, Alaska, Washington, Oregon, Nevada, Pennsylvania, and Idaho.

With another month left in the summer driving season, gasoline prices could well drift slightly higher in the coming weeks. However, prices normally start going back down after Labor Day, when demand falls and refineries switch over to producing winter grade fuel, which costs less.

Gasoline prices have risen in the last four weeks, pushed higher by a rise in oil prices and a larger than expected drop in gasoline stockpiles.The AAA...

Gasoline prices hit 2017 lows

Supplies are plentiful and consumers are using less

Driving is less costly for consumers this summer as the price of gasoline has hit a low for the year.

The AAA Fuel Gauge Survey shows the national average price fell to $2.23 a gallon over the July 4th holiday weekend and is only a couple of cents higher today.

The average price of self-serve regular is $2.25 a gallon, 11 cents less than a month ago and the same as it was at this time in 2016. The national average price of premium gas is $2.79 a gallon, a dime cheaper than a month ago. The price of diesel fuel is $2.44 a gallon, six cents cheaper than a month ago. These are national averages. Prices will vary in your region.

AAA reported the price of gasoline declined in 46 states, with prices rising only in Illinois, Oklahoma and Washington, D.C. Prices in Hawaii and Maine remained the same. Consumers can buy gas for $2.00 or less at one out of every four gas stations in the country.

Tepid demand and increased supply

“The combination of tepid demand and increased gasoline and crude output continues to put downward pressure on gas prices,” said Jeanette Casselano, AAA spokesperson.

At the same time, crude oil prices have fallen again after one more attempt at a rally. The price of crude was down at midday Friday to about $44 a barrel.

AAA notes that the last time gasoline prices were this low was in 2005. It's worth remembering that was less than two months before Hurricane Katrina ripped through the Gulf of Mexico, knocking many oil rigs offline.

Oil and gasoline prices surged in the aftermath, because of the supply shortage, and remained high for years, even after the rigs came back online. It wasn't until Saudi Arabia became full scale production in late 2014, in order to drive American shale producers out of business, that oil and gasoline prices came back down again.

Midwestern drivers getting a break

Today's low national average gasoline price is helped by huge declines in the Midwest. According to AAA, the price of gas has fallen 28 cents a gallon over the last month in Ohio. It's down 23 cents in Michigan and 19 cents in Indiana.

Prices are lowest in the Southeast and Southwest, led by South Carolina, at $1.90 a gallon and Alabama at $1.96. The most expensive gas is still found in the Western states, led by Hawaii, at $3.05 a gallon, and California, at $2.94.

Driving is less costly for consumers this summer as the price of gasoline has hit a low for the year.The AAA Fuel Gauge Survey shows the national avera...

July 4th motorists will find very cheap gas prices

But study shows being on the road July 4th can be dangerous

More consumers will take to the nation's highways over the Independence Day holiday period, and when they do they'll find gas prices lower than they were last year.

Nationwide, the AAA Fuel Gauge Survey shows the average price of self-serve regular is $2.24 a gallon, down four cents from last week and five cents less than this time a year ago.

The national average price of premium gas is $2.79 a gallon, in line with where it was a year ago. The price of diesel, at an average of $2.44 a gallon, is actually seven cents higher than a year ago.

Cheaper than 50 years ago

To put today's gasoline price in perspective, the national average gasoline price in 1967, 50 years ago, was 33 cents a gallon. Yes, that sounds cheap, but adjusted for inflation, that's the equivalent of $2.45 today. So today's gas price is actually cheaper than it was 50 years ago.

Travelers in the Western states will continue to pay the most for gasoline, but even in California, the statewide average price of regular gas is back below the $3 a gallon mark. The California price of regular is down 16 cents a gallon in the last month.

The cheapest gas is still found in the Southeast. Five states today have average prices of regular gas below the $2 a gallon mark, led by South Carolina with an average price of $1.91 a gallon.

AAA attributes the favorable fuel environment to record refinery rates, high gasoline and crude inventory, and slightly lower demand this year. At the same time, Wall Street's hopes for rising oil prices are fading.

The price of oil has not been able to remain north of $50 a barrel for any length of time before American shale producers increase supplies to the point that the price falls again.

Dangerous day

While there is good news for motorists when it comes to gasoline, a study by Geotab -- a GPS vehicle tracking company -- provides some sobering commentary. It says July 4th is officially the most dangerous day of the year to drive in the U.S.

After analyzing the fatality and traffic data over a 10-year period, it was able to break down traffic deaths by day. Dates around holidays where alcohol consumption is prevalent have a significantly higher Fatal Crash Rate (FCR) than other days in the year.

Of those national celebrations, July 4th has an average of 119 deadly crashes over a 10-year period and a Fatal Crash Rate of 14.9, giving it the dubious distinction of being the most dangerous day to be on the road.

More consumers will take to the nation's highways over the Independence Day holiday period, and when they do they'll find gas prices lower than they were l...

Gasoline follows oil prices lower

Consumers reaping the benefit of continued oil glut and falling demand

Just about everywhere in the country, gasoline prices are going down, a nice bonus for motorists as we get into the summer driving season.

The reason is two-fold. There haven't been any major incidents at oil refineries that would interfere with regional distribution of gasoline. And the price of oil, used to make gasoline, is dropping like a rock.

"Oil plummeting to $44 a barrel, wholesale gas prices taking a beating," Tweeted Patrick DeHaan, senior petroleum analyst at GasBuddy. "We haven't seen the lowest gas prices of the summer!"

Averaging $2.32 a gallon

The national average price of self-serve regular is just under $2.32 a gallon, according to the AAA Fuel Gauge Survey. That's down about four cents from a week ago and perhaps more noteworthy, is about a nickle a gallon less than this time a year ago.

Throughout most of the winter and spring, prices at the pump have been significantly higher than year ago levels. That's because oil prices have been rising since last November, largely on OPEC's talk of production cuts, to reduce the supply of oil.

But the latest evidence suggests that the cuts, in fact, were just talk. There is still a large supply of oil; U.S. shale producers have upped their rig count as the price of oil rose; and OPEC nations are still pumping at old rates.

Huge supply of gasoline

The latest shock to energy traders on Wall Street was a report this week showing a huge build up in U.S. gasoline stockpiles, in part because consumers are using less.

According to the report from the Energy Information Administration (EIA), U.S. gasoline inventories are up a staggering 9% over the five-year average. Perhaps just as notable, gasoline demand is down 1.2%.

As a result, AAA reports several states have seen double-digit price declines. In South Carolina, the statewide average price of gasoline has dipped below $2 a gallon for the first time in months. Only Hawaii and California have average gas prices above $3 a gallon.

"If refiners continue to produce record amounts of gasoline and oversupply the market, consumers will reap the benefit and see slight fluctuations in gasoline prices in coming weeks," AAA predicts.

AAA also notes California may see a slight increase in prices at the pump next month as the state raises its excise tax rate for gasoline.

Just about everywhere in the country, gasoline prices are going down, a nice bonus for motorists as we get into the summer driving season.The reason is...

Memorial Day weekend gas prices slightly higher than last year

Prices highest in the West, cheapest in the Southeast

Millions of consumers will hit the road for the long Memorial Day weekend and will find gasoline just a little more expensive than it was last year.

According to the AAA Fuel Gauge Survey, the national average price of self-serve regular is around $2.36 a gallon, up seven cents from last Memorial Day weekend. The national average price of premium gas is $2.88 a gallon, 13 cents a gallon more than last year.

The national average price of diesel fuel is $2.50 a gallon, nearly 22 cents a gallon more than last year.

Fuel prices have been relatively stable in the last few weeks, with fewer refinery issues to create supply bottlenecks. The main factor in this year's higher prices is the price of oil, which is trading higher than at this time last year.

34 million hitting the road

Demand for motor fuel is also rising. AAA estimates some 34 million people will take a road trip over the weekend, nearly a million more than last year. That could speed up the draw-down in fuel supplies, keeping prices at the pump a little higher over the course of the summer.

While the national average price of gas has been relatively stable in recent weeks, a few states saw significant price hikes in the last seven days. AAA reports the statewide average price in Ohio jumped 10 cents a gallon, rose nine cents in Michigan, gained eight cents in California, and added six cents in Indiana.

Supplies are falling in the West

The Energy Information Administration (EIA) reports gasoline supplies fell in the West Coast region last week, resulting in upward pressure on prices. The price increases in California has pushed the statewide average over $3 a gallon for the first time in weeks. Supply is being held in check by routine maintenance at Phillips 66’s Carson refinery, Valero’s Benicia refinery and Tesoro’s Golden Eagle and Carson refineries.

Drivers in the Southeast continue to enjoy the lowest gasoline prices in the nation. The statewide average for regular is $2.05 in South Carolina, $2.09 in Alabama and Mississippi, and $2.10 in Tennessee.

Millions of consumers will hit the road for the long Memorial Day weekend and will find gasoline just a little more expensive than it was last year.Acc...

Entire nation enjoying a drop in gasoline prices

With no refinery issues and falling oil prices, everyone is getting a break

With the near collapse of crude oil prices, nearly all motorists are getting a break at the gas pump, which is unusual.

Generally, gasoline prices fluctuate by region. They might go down in Louisiana and Texas but go up in Michigan and Indiana. That's because refinery issues can affect prices in regions, sending them higher or lower.

But as the U.S. approaches Memorial Day and the start of the summer driving season, Patrick DeHaan, senior petroleum analyst at Gasbuddy, is seeing something interesting. Gasoline prices are dropping just about everywhere.

"Forty-nine of 50 states are seeing gasoline prices lower than a week ago, but the average drop is four cents a gallon, so there is more room for prices to fall this week," DeHaan told ConsumerAffairs.

The refineries have switched over to producing summer grade gasoline, which is more costly to make. But now the oil they use to make it costs less, with the price of crude tumbling from the mid $50 range to the mid forties. An upcoming decision by OPEC to extend its production cuts could push prices back up, but it's worth noting that oil prices have fallen dramatically, even with OPEC producing less.

Four cents cheaper than last week

The national average price of self-serve regular is around $2.33 a gallon, down four cents from a week ago, according to the AAA Fuel Gauge Survey. The average price of premium gas is $2.86, three cents lower than seven days ago.

The most expensive gasoline in the nation today is in Hawaii, the only state where the average price is over $3 a gallon, at $3.06. The cheapest gasoline can be found in South Carolina, more than a dollar cheaper, at $2.04 a gallon.

While prices are falling, they are still higher than they were at this time a year ago. But that gap is narrowing. DeHaan says prices may continue to fall, but only to the point that they match the 13% drop in oil prices.

"I’d expect prices this summer to be very close to last summer, perhaps slightly more expensive, so long as there aren’t any unpredictable outside interference like hurricanes, OPEC cuts, or wars."

With the near collapse of crude oil prices, nearly all motorists are getting a break at the gas pump, which is unusual.Generally, gasoline prices fluct...

Gasoline prices move sharply higher

Much of the national price rise is centered in the Midwest

After flatlining for much of the early spring, gasoline prices have suddenly started moving higher, reflecting the change-over to summer blends of gasoline at the nation's refineries.

The AAA Fuel Gauge Survey shows the national average price of self-serve regular is about $2.39 a gallon, up six cents in the last week and nearly a dime in the last 30 days.

The national average of premium gasoline is nearly $2.90 a gallon, up over five cents in the last week and nearly eight cents in the last month.

AAA analysts say oil prices have come back into play in pushing gasoline prices higher. Geopolitical tensions in the Middle East sent crude oil prices sharply higher on world markets in the last week. Prices got another boost Monday when an oil field in Libya was shut down over the weekend because of civil strife.

Sweet spot for oil prices

Some analysts think U.S. production will keep oil prices from going much higher, with a trading range between $40 and $60 a barrel. At that level oil companies can be profitable, but gasoline prices for consumers would remain reasonable.

This week's rise in the national average gasoline price is largely attributable to a price spike in the Midwest region. AAA reports five Great Lakes and Central states experienced some of the nation’s most significant gas price hikes in the past seven days.

In Michigan, the statewide average price jumped 12 cents a gallon. In Indiana, the average price gained 11 cents. Missouri, which normally has some of the cheapest gas in the country, saw the average price climb nine cents. In neighboring Illinois, the average price gained eight cents, and prices rose seven cents a gallon in Wisconsin.

Refinery issues

That's partly due to reduced output at Phillips 66’s Wood River refinery in Illinois, which is still undergoing planned maintenance work. Adding to the reduced supply, BP’s Whiting, Ind., refinery reported a minor issue on its second-largest crude distillation unit, which is affecting normal operations.

Gas prices on the West Coast remain some of the most expensive in the nation, but the good news for drivers there is prices barely moved higher in the last seven days. The cheapest states for gasoline are clustered in the Southeast, with the exceptions of Florida, Georgia, and South Carolina.

After flatlining for much of the early spring, gasoline prices have suddenly started moving higher, reflecting the change-over to summer blends of gasoline...

Consumers overpaying for gasoline, study finds

GasBuddy finds widest price gap within markets when prices are low

The price of gasoline has been relatively low for nearly two and a half years. The drop, which began in late 2014, followed 11 years of near record high prices at the pump.

But while consumers are far better off than they were in 2012, Patrick DeHaan, senior petroleum analyst at GasBuddy, says right now is when consumers are in greatest danger of overpaying for fuel. He says GasBuddy conducted a study that demonstrates just how much we're overpaying.

Think of it this way. When prices are sky-high, you probably search out the cheapest gas station in your area before filling up. Now, when prices are relatively low, just about any station will do.

But DeHaan says stations tend to charge closer to the same amount for gas when prices are high. When they're low, there can be a wide variation in the same city.

Tranquility and affordability

“We're in a relative period of tranquility and affordability at the pump, and so the data suggests Americans are at particular risk right now of overspending on gasoline,” DeHaan said. “And we expect that to continue for some time.”

To prove the point, DeHaan says GasBuddy looked at the last seven years of gas price data. In 2012, the national average was $3.61 a gallon. However, the price spread between the 5% of stations with the highest price and the 5% with the lowest price was only 95 cents a gallon.

But last year, when the national average was a much more affordable $2.13 a gallon, the spread increased to $1.13 a gallon.

Price complacency

Prices are not only still low, but they are also lower than expected for this time of year, due to the unexpected drop in oil prices. DeHaan says it could mean motorists have gotten a little complacent about the price they pay.

In Washington, DC, he notes, the spread between highest and lowest stations is $1.21 a gallon. In Los Angeles and San Francisco, the spread is around $1.

In some large metros, DeHaan says consumers can pocket $60 a month just by being selective about where they fill up.

The price of gasoline has been relatively low for nearly two and a half years. The drop, which began in late 2014, followed 11 years of near record high pr...

Motorists getting an unusual break this spring

The annual seasonal price rise hasn't happened so far

In a famous Sherlock Holmes story, the key clue was the dog that did not bark. When it comes to gasoline prices, the key victory for consumers, it seems, is the price that did not rise.

By all accounts, the national average gasoline price should have risen about a dime a gallon over the last two or three weeks. It hasn't.

The AAA Fuel Gauge Survey shows today's average price of self-serve regular is $2.29 a gallon. That's what it was the day before, and a week ago. If you go back a month, the price was only a penny a gallon more.

Premium gasoline averages $2.81 a gallon and has a nearly identical pricing pattern to regular.

The normal pattern is that prices at the pump begin rising in early March as oil refineries begin regular maintenance and start switching over to the production of summer grade fuel blends. The reduced output almost always sends prices higher.

Oil prices are in reverse

So what's different about this year? Chances are, it's the price of oil. After breaking through the $55 a barrel level, prices have dropped below $50.

Oil prices started rising last fall when the OPEC producers, led by Saudi Arabia, decided to reduce production in order to boost oil prices, which had been low for two years. The market assumed OPEC would be successful and traders began bidding up the price of oil, making gasoline more expensive than it was the previous year.

But in the last few weeks it has become clear that OPEC faces a big challenge in raising oil prices. As the price rose, it became more profitable for U.S. shale producers to increase production, which they have done.

U.S. stockpiles of oil have become so large that it has weakened the market -- bad for traders and speculators but very good for consumers.

Saudis cut exports to U.S.

MarketWatch reports U.S. stockpiles have now hit a record, prompting the Saudis this week to "dramatically" cut oil exports to the U.S. OPEC, it seems, is desperate to reduce the U.S. stockpile of oil. Otherwise, it won't be able to ratchet oil prices higher.

For consumers, there's some stability at the gas pump this spring. Even in California, one of the most expensive places in the U.S. to fill up, the statewide average has fallen a bit in the last week, remaining below $3 a gallon for regular and at $3.23 for premium.

The West and upper Midwest has the most expensive fuel this week. The cheapest gasoline is in the Southeast, where the statewide average in South Carolina is $2.02 a gallon for regular and $2.59 for premium.

In a famous Sherlock Holmes story, the key clue was the dog that did not bark. When it comes to gasoline prices, the key victory for consumers, it seems, i...

ExxonMobile expanding Gulf Coast refinery operations

But the extra fuel may not be headed for your neighborhood gas station

ExxonMobile CEO Darren Woods says the company plans to spend $20 billion over a ten-year period to upgrade and expand oil and chemical operations along the Gulf Coast.

Woods is talking up the economic benefits, with new construction projects at 11 new and existing sites, generating thousands of temporary and permanent jobs. But consumers might be asking if the project will result in increased supplies of gasoline, keeping U.S. prices low and supplies plentiful.

Patrick DeHaan, senior petroleum analyst at GasBuddy, said he doubts that is part of the plan.

"They could be positioning themselves to use cheap energy and open up more refined exports," DeHaan told ConsumerAffairs. "As the U.S. has matured in terms of fuels demands, it’s hard to imagine any refinery expansions were geared to serve U.S. motorists."

Export opportunities

In a statement, Woods hinted that's the case, with growing U.S. oil supplies creating new opportunities for exports.

“We are using new, abundant domestic energy supplies to provide products to the world at a competitive advantage resulting from lower costs and abundant raw materials," Wood said. "In this way, an upstream technology breakthrough has led to a downstream manufacturing renaissance.”

While U.S. law was recently amended to allow American oil to be exported, U.S. gasoline has always been cleared for sale beyond U.S. borders. And as long as exports don't impact U.S. supplies, raising the price at the pump for consumers, they could yield a benefit to the national economy, helping to narrow the trade deficit.

Growing demand in the developing world

Since there has been dramatic improvement in developing world economies in just the last few months, Woods says the company sees opportunity.

“These projects are export machines, generating products that high-growth nations need to support larger populations with higher standards of living,” he said. “Those overseas markets are the motivation behind our investments. The supply is here; the demand is there. We want to keep connecting those dots.”

In fact, U.S. gasoline demand has fallen in recent years, thanks to newer cars with higher fuel economy and the growing use of electric vehicles.

ExxonMobile CEO Darren Woods says the company plans to spend $20 billion over a ten-year period to upgrade and expand oil and chemical operations along the...

Gas prices jump in the Midwest

Motorists in Michigan saw an overnight rise of 10 cents a gallon

Nationwide, consumers enjoyed relatively stable gasoline prices during February, but March has started like a lion in the Midwest.

In Michigan, AAA reports the statewide average price of self-serve regular jumped 10 cents a gallon overnight, to $2.43 a gallon. Yesterday, Michigan motorists were paying $2.33. A month ago they were paying $2.26. A year ago they paid $1.82.

Drivers using premium gas saw a less abrupt jump, but the statewide average price rose above $3 a gallon for the first time since 2014.

In Illinois, the overnight price hike was five cents a gallon, with the statewide average rising from $2.33 yesterday to $2.38 today. The statewide average for premium rose a little more than three cents overnight to $3.09 a gallon. Diesel prices have remained essentially flat.

Summer grade switch-over

GasBuddy senior petroleum analyst Patrick DeHaan says refineries serving Midwestern states have begun the switch-over to producing summer grade gasoline, which always leads to price hikes in late winter and early spring.

DeHaan notes that over the last five years, the national average gasoline price has risen an average of 59 cents a gallon from February to Memorial Day. However, the recent trend has been for higher prices. Last year, prices rose 69 cents a gallon over that period.

What's driving the higher highs? It certainly isn't supply and demand. All during February AAA noted that gasoline supplies remained strong while demand was weak. Gasoline prices, instead of going down, remained fairly flat.

Today, the national average for regular, according to the AAA Fuel Gauge Survey, is $2.31 a gallon. Last year at this time it was $1.78.

The biggest difference between this year and last is the price of oil. Oil costs more this year, though it really isn't clear why.

Role of oil prices

Investors have moved into oil futures in greater numbers since the fall, bidding up the price, believing that OPEC is serious about cutting production enough to drive prices back up. Whether it is, however, remains to be seen.

And AAA notes that U.S. oil production has snapped back with last fall's rise in oil prices. Late last week, oil field service company Baker Hughes noted that the U.S. producers added five more rigs, bringing the total rig count to 602. At the same time, the government's most recent weekly status report shows U.S. crude oil inventories rose to a total of 518.7 million barrels.

Nationwide, consumers enjoyed relatively stable gasoline prices during February, but March has started like a lion in the Midwest.In Michigan, AAA repo...

Gas prices poised for annual early spring climb

Prices at the pump are already much higher than they were last year

Consumers who have gotten accustomed to relatively low gasoline prices over the last two and a half years will have an adjustment to make this spring.

Gas prices are going to be a bit higher than they were last year.

Actually, they already are. The AAA Fuel Gauge Survey shows the national average price of self-serve regular is $2.28 a gallon, with almost no movement in the last week. But compared to the price a year ago, it is 57 cents a gallon more.

The national average price of premium gasoline, required in a growing number of new vehicles, is $2.80 a gallon, about 59 cents a gallon more than last year. Diesel is selling, on average, at $2.51 a gallon, about 53 cents more than last year.

Rising oil prices

The reason for the higher prices, up until now, is the cost of crude oil. Oil prices are higher than they were last year, mainly because OPEC has been sending strong signals that it plans to cut production to reduce the huge glut of oil that has kept oil prices relatively soft since late 2014.

However, most of those proposed cuts have not actually occurred yet. The oil market's growing confidence that they will has prompted traders to bid up crude oil prices to just under $55 a barrel -- still a long way from its highs.

Over the next few weeks, motorists will likely begin to see prices at the pumps for all grades of fuel begin to move higher. That's because refineries typically reduce operations in late winter and early spring to perform maintenance and begin to switch to more expensive summer grades of gasoline.

Those prices normally rise until the Memorial Day weekend before slowly declining over the summer. If this year is like the last one, consumers could see gasoline prices go up another 25 cents or so before they peak.

Refinery issues could boost prices more

They could shoot even higher if a refinery or two has to cut back production even more. Over the weekend a fire broke out at a refinery in Torrance, Calif. According to the Los Angeles Times, the fire started with an explosion Saturday morning. In a Tweet, GasBuddy analyst Patrick DeHaan says California motorists could see gas prices jump 10 to 25 cents a gallon as a result.

Currently, the statewide average price of regular gas in California is $2.90 a gallon. The price of premium is $3.14 a gallon.

California has some of the most expensive gasoline in the country. The cheapest gas this week is found in South Carolina, where the statewide average for regular is $2.03 a gallon and the average price of premium is $2.60.

Consumers who have gotten accustomed to relatively low gasoline prices over the last two and a half years will have an adjustment to make this spring.G...

Gas prices aren't as low as they seem

GasBuddy analyst says nearly half of new cars now require more expensive premium

When ConsumerAffairs reports on the price of gasoline, we always focus on the price of regular gas as the baseline, since the assumption is that's the fuel grade most consumers buy.

But increasingly, more consumers are filling up with more expensive premium gas, not because they want to but because the engine in their car requires it.

Patrick DeHaan, senior analyst at GasBuddy, has produced a chart that shows the rising percentage of new vehicles on the road that require premium. His chart shows it is now just under half of all new cars sold.

These cars are equipped with high-performance engines – turbo and super-charged. The reason these engines are going into so many new cars, says DeHaan, is the government's CAFE standard, which has raised the average miles per gallon a vehicle fleet must get.

“It's kind of an easy fix in that more octane can net you more power,” DeHaan told ConsumerAffairs. "Manufacturers have been pushed to do this.”

Positive effect

DeHaan believes rising CAFE standards have been a good government move because it forced carmakers to work harder at being fuel efficient. Consumers have benefited. Carmakers hadn't invested a whole lot in R&D over the last 50 years, he says.

“We're in these cars that have been modernized but what's under the hood hadn't changed a whole lot, DeHaan said. “We have cylinders and pistons and now, with CAFE standards, you're forcing manufacturers to the drawing board and they're doing more with less.”

These turbocharged engines are much smaller and use less fuel. But they produce the same, or more power than larger engines that consume more fuel. That, says DeHaan, is why we're seeing more of them. The consumer doesn't notice the difference, except at the gas pump.

Motorists driving a high performance car might not have to fill up as often, but when they do it is more expensive. Premium fuel costs more than regular.

Drastic differential

“You've seen a drastic differential between the cost of regular and premium fuel, especially in some areas of the country,” DeHaan said.

Not so much in California, where the difference is only about 25 cents a gallon. But the price gap is widening in the Midwest.

“In Chicago it's commonplace now to find premium a dollar a gallon more than regular,” DeHaan said. “You're already seeing some stations where premium is $3.99 a gallon. And if gas prices in Chicago go up 25 to 50 cents a gallon like they do every spring, that's going to put a lot of stations in downtown Chicago where premium is going to sell for over $4 a gallon, even approaching $5.”

According to the AAA Fuel Gauge Survey, the national average price for regular is around $2.28 a gallon. But the average price of premium is $2.79, 51 cents more. That's 28 cents a gallon more than the average price of diesel.

The bottom line, says DeHaan, is that consumers shopping for a new car have to pay attention to the engine under the hood. If it is a high-performance engine requiring premium, the cost of keeping it running could be a lot more than you think.

When ConsumerAffairs reports on the price of gasoline, we always focus on the price of regular gas as the baseline, since...

Why gas isn't going back to $3 a gallon

American producers will keep oil prices in check

Gasoline prices rose late last year, at a time when prices at the pump normally go down.

The normal decrease is because the nation's refineries have completed the switch-over to winter grade gasoline, which is cheaper to produce. Consumers also tend to drive less in the late fall and early winter, reducing demand.

So what was behind the uncharacteristic price rise? The price of oil, pure and simple.

OPEC, primarily Saudi Arabia, agreed to cut back oil production. Even big non-OPEC producers, like Russia, vowed to produce less.

Oil traders got the message. The oil glut that has existed for more than two years was about to get a lot smaller. With stockpiles falling, the price had to rise, the thinking went.

$50-plus oil

So far, oil prices have continued to follow that script. The price of both foreign and domestically produced oil has settled in the low $50 range, and that has sent prices at the pump higher. It's even caused some analysts to suggest that gasoline prices could creep back above $3 a gallon in the coming months, as they have in Hawaii, where pump prices are always higher because of steep transportation costs.

But just how likely is it that we'll return to the "good old days" for energy speculators? There is one big thing working against gasoline prices going to $3 a gallon and beyond. The U.S. oil industry.

The reason oil prices have been low for more than two years is because Saudi Arabia ramped up production specifically to drive American shale oil producers out of business. While they undoubtedly damaged the industry, driving some small companies out of business, they made those that survived much more efficient. As a result, shale producers can be profitable at $50 a barrel. As the price of oil goes up, these producers will produce more oil in the U.S., helping to offset the declines in the rest of the world.

Ready for a comeback

"U.S. shale is ready for a comeback," declared an article in Business Insider this week, noting that shale companies are starting to raise money for expanded production. Rig counts are at the highest level in more than a year.

Already, consumers may be seeing the results when they fill up. Early this week AAA reported the national average gasoline price had dropped eight days in a row. It has since declined even more, to $2.32 a gallon.

While AAA says the decline may be temporary, depending on whether OPEC can keep its commitment, U.S. producers are likely to keep energy speculators in check. With American producers not bound by any production agreements, it could be very risky for investors to bet on a big increase in oil prices in the months ahead.

So, while some states may get close to $3 a gallon -- Hawaii is already there -- most states will probably stay below it.

Gasoline prices rose late last year, at a time when prices at the pump normally go down.The normal decrease is because the nation's refineries have com...

At the gas pump, 2017 begins with a surge

Pump prices rise with the price of oil

Gasoline prices jumped nationwide in the last week, all due to rising oil prices and the belief by oil traders that OPEC's agreement to reduce output will send prices still higher in 2017.

After creeping higher in late 2016, oil today is trading between $52 and $55 a barrel.

The AAA Fuel Gauge Survey shows the national average price of self-serve regular is $2.35 a gallon, up about six cents in the last week and 18 cents higher than a month ago.

Last year at this time, fuel prices were headed lower, not higher, with the national average price at $1.99 a gallon.

What's different at the start of 2017 is the belief that the world's oil producers – OPEC and non-OPEC producers alike – are finally on the same page, agreeing to curtail production in order to shrink the oil glut and send oil prices higher.

Whether that actually happens or not is far from certain, but the market – which sets the price of oil – is betting that it will.

Price finds a middle ground

The result is gas prices that are higher than they have been all year, but still significantly lower than 2014, when the national average price was often above $3 a gallon.

According to AAA, the least expensive states in which to fill up are South Carolina, where the average price is $2.10 a gallon; Arizona, where gas averages $2.12 a gallon; and Alabama, where the statewide average is $2.13 a gallon.

Tennessee, Mississippi, Texas, Arkansas, Louisiana, Oklahoma, and Missouri all have statewide average prices below $2.19 a gallon.

The most expensive gasoline states continue to be found in the West. Hawaii saw its statewide average climb above $3 a gallon for the first time in more than a year while California is the second most expensive state at $2.76 a gallon.

Midwest supply issues

In addition to higher oil prices, supply issues helped send prices higher in the Midwest during the last week. The latest data from the Energy Information Administration show gasoline inventories in the region fell by one million barrels last week, mainly due to lingering refinery issues.

But the pain was not felt evenly. Michigan drivers saw prices at the pump go up seven cents a gallon while Ohio motorists saw prices go down by the same amount.

Gasoline prices jumped nationwide in the last week, all due to rising oil prices and the belief by oil traders that OPEC's agreement to reduce output will...

Gas prices rising sharply in the Midwest

But the price in the most expensive states is actually going down

Gasoline prices are still relatively low but are rising nationwide, at a time when they are normally headed lower.

This week, prices in the Midwest have moved sharply higher, outpacing the increases in the rest of the country. In fact, some of the nation's most expensive states for gasoline have actually seen prices at the pump go down.

The AAA Fuel Gauge Survey shows the national average price for self-serve regular is $2.25 a gallon, up only three cents in the last week but 12 cents more than a month ago. Last year at this time, the national average price was just under $2 a gallon.

Sharp rise in the Midwest

In the Midwest, Michigan is seeing the largest increase in prices at the pump, with the statewide average rising nine cents a gallon, to $2.38, since yesterday. Patrick DeHaan, senior petroleum analyst at Gasbuddy, Tweeted that a plunge in temperatures caused problems at the Exxon Mobil refinery near Joliet, Ill., sending spot gasoline prices higher in the region, particularly in Chicago.

The current statewide average price of gasoline in Illinois is $2.36 a gallon, up nine cents from a week ago.

As for the rest of the country, the rising price of oil is mostly responsible for the unseasonable rise in prices at the pump. There is still a glut of oil on the world market, but AAA reports oil prices are rising on speculators' expectation that OPEC's recent agreement curtailing production will reduce supplies in the future.

Falling prices on the West Coast

Motorists on the West Coast still pay some of the highest fuel prices in the nation. Hawaii, which is always the most expensive, leads at $2.95 a gallon. But elsewhere, western consumers have seen prices actually come down in recent days.

Motorists in Idaho are paying 18 cents a gallon less this week while prices have dropped eight cents a gallon in Nevada.

One reason for this is a surge in West Coast refinery output. The Energy Information Administration reports gasoline production in the region reached a one-month high of 1.6 million barrels a day, and inventories remain at a 15-week high.

The nation's cheapest fuel is still found in the South and Southeast. Arkansas, Oklahoma, South Carolina, Mississippi, Texas, Alabama, and Tennessee all have statewide averages of $2.05 a gallon or less.

Gasoline prices are still relatively low but are rising nationwide, at a time when they are normally headed lower.This week, prices in the Midwest have...

Gasoline prices poised to move sharply higher in 2017

Oil prices rising because non-OPEC producers agree to cut production

Consumers have enjoyed relatively low gasoline prices for more than two years, thanks to a huge oil glut that drove down prices.

But consumers should prepare to pay more to fill up their cars and trucks next year. While all attention was focused on whether OPEC could agree to cut production, and whether members would cheat, little attention was paid to non-OPEC members, like Russia. In something of a surprise, these countries have agreed to significantly reduce output.

As a result, the AAA Fuel Gauge Survey reports the national average price of self-serve regular has risen 14 straight days, to $2.21 a gallon today. That's up only three cents from a week ago and only four cents from a month ago.

What does 2017 hold?

But the question for consumers is where will it go over the next few months. Patrick DeHaan, senior petroleum analyst at GasBuddy, has been active on Twitter in recent days, holding out the prospect that some parts of the country could see a return to $3 a gallon gas.

“Deal to cut more oil production drives gasoline prices even higher,” DeHaan Tweeted.

A GasBuddy analysis notes the trend at gas stations has been toward rising prices, strongly influenced by the major rise in crude oil. At $53 a barrel, oil is nearly $10 higher than it was a month ago.

“And the pain isn’t likely to subside soon,” GasBuddy reports. “Over the weekend, some non-OPEC member countries also agreed to cut oil output, led by the Russians, lending more support to the price of oil and causing them to jump again to start the week.”

Expensive states see lower prices

Oddly, the Western states, where gasoline tends to be most expensive, hasn't felt the effects of higher oil prices. In fact, AAA reports this region is the only part of the country where prices have gone down in the last week.

DeHaan says consumers accustomed to lower prices and now driving large SUVs may be the first to feel the effects, but notes there could be countervailing forces that keep prices at the pump from returning to the painful “bad old days.”

In a Tweet, he says the U.S. rig count jumped by 5% in one week, suggesting U.S. oil producers, hurt by two years of lower oil prices, are getting back in the game. Their output could keep U.S. oil supplies from getting too tight and causing hardships for motorists.

Consumers have enjoyed relatively low gasoline prices for more than two years, thanks to a huge oil glut that drove down prices.But consumers should pr...

How real is OPEC's agreement to cut oil production?

If it doesn't hold, consumers could see still lower gasoline prices

Oil prices move up and down like the stock market, and it takes some time before those movements translate to consumers at the gas pump.

Even so, many motorists might have noticed gasoline prices have moved up in the last week. The AAA Fuel Gauge Survey shows the national average price of self-serve regular is $2.19 a gallon, up four cents from last week and 17 cents from a year ago.

The main reason for the slightly higher prices is last week's agreement by OPEC that its members will reduce their output in the coming year to shrink the persistent glut of oil on world markets. The move is aimed at pushing the price of oil above $50 a barrel, which would increase profits for producers while raising fuel costs for consumers.

“Traditionally this time of year gives way to lower gas prices as a result of cheaper to produce winter-blend fuel and less demand,” AAA said in a statement. “However, due to the agreement from OPEC it is still unclear if prices will retreat considerably ahead of the upcoming holidays.”

Can the agreement hold?

But OPEC historically has had problems enforcing its production cuts, and industry analysts are already pointing to what they say are cracks in the brand new, yet to be implemented agreement. MarketWatch reports that analysts are pointing out that OPEC oil production reached a record level of 34.2 million barrels a day last month.

Analysts say OPEC was producing nearly 1.7 million barrels a day more than the amount it has set as a target, beginning in January. They say when non-OPEC countries like Russia see these figures, they may be much less likely to curtail their own oil output, which must happen in order for supplies to go down. Meanwhile, Russia also stepped up production last month.

Reuters reports Russia produced more than 11 million barrels a day in November, its highest level in nearly 30 years. Between Russia and OPEC, there was enough oil produced in November to meet half of the world's demand.

While this may be bad news for oil producers, consumers stand to benefit, especially when they fill their tanks. The modest price hikes consumers have experienced in recent weeks, it should be pointed out, are all speculative.

Gasoline futures prices have been bid higher simply on the expectation that oil is going to cost more in the future. But if oil production doesn't actually go down, eventually that sentiment will change, and it will bring gasoline prices down again.

Oil prices move up and down like the stock market, and it takes some time before those movements translate to consumers at the gas pump.Even so, many m...

OPEC deal sends oil prices soaring

Analysts says prices at the pump likely to rise in the short run

The OPEC oil cartel members, meeting in Vienna, have agreed to production limits in an effort to push the price of oil higher.

The markets reacted immediately, with the price of crude jumping more than 6.5% to $48.22 a barrel in early trading in New York.

Two years ago, OPEC member Saudi Arabia launched a huge increase in production in an effort to drive down the price of oil. It took that self-defeating action to try to drive American shale oil producers out of business and regain market share.

It was partly successful but caused major economic distress for many other oil producers, such as Venezuela, Russia, and Nigeria. The Saudis, who are bearing the brunt of the production curbs, were forced to act as Iranian oil, blocked for years by sanctions, has begun flowing back onto the market.

It's been good for consumers

While U.S. oil producers have suffered over the last two years, consumers have enjoyed reasonable gasoline prices. Adjusted for inflation, today's national average price is less than it was 50 years ago.

The question consumers may be asking is what OPEC's agreement does to the price at the pump. Patrick DeHaan, senior petroleum analyst at GasBuddy, says consumers should expect to see a jolt at the pump in the short term.

“There’s been a lot of hype about OPEC’s possible cut, and they had to act on their threats,” DeHaan told ConsumerAffairs. “Expect no sub-$2 a gallon national average if the deal holds.”

Currently, the AAA Fuel Gauge Survey shows the national average price of self-serve regular has ticked up two cents from Tuesday, to $2.15 a gallon. That's more than 11 cents a gallon higher than a year ago.

Long-term outlook brighter

But long-term, DeHaan says the outlook for gasoline prices may be brighter for motorists. If the markets begin to doubt that OPEC members will abide by the agreement – and their history in that area is pretty checkered – then oil prices could begin to drift lower again.

“International Energy Agency (IEA) data will be paramount to see if OPEC is acting on the cut, which I suspect they will not,” DeHaan said. “Too much was on the line here, this agreement is held together by knock off scotch tape. Just one member ignoring quotas is enough to throw the integrity of it all away.”

DeHaan says he expects few OPEC members will actually abide by their quotas. If that's the case, consumers could see only moderate increases in fuel prices in the second half of next year, if they see them at all.

The OPEC oil cartel members, meeting in Vienna, have agreed to production limits in an effort to push the price of oil higher.The markets reacted immed...

Thanksgiving motorists to find falling gas prices

But prices are still slightly higher than last year

According to AAA, more than 43 million Americans will hit the road this Thanksgiving holiday. When they stop to fuel up, they'll find relatively cheap prices at the pump, and the prices could be even cheaper on the return trip.

The AAA Fuel Gauge Survey shows the national average price at $2.13 a gallon, nearly a dime cheaper than a month ago, but six cents more than last Thanksgiving weekend. The price of diesel fuel is actually down from last year.

Gas prices are higher than last year because oil prices rose in September and October on the expectation that OPEC would agree to curtail production when it meets next week. That expectation has grown weaker in recent weeks, so the price of oil has slipped lower on huge supplies and declining demand.

Oklahoma has the cheapest gasoline prices in the nation. The statewide average there is $1.88 a gallon. It's $1.89 in Missouri and $1.91 in Kansas and Texas.

The most expensive gasoline is found in Hawaii, at $2.85 a gallon, followed by California at $2.68, and Washington and Alaska at $2.61.

Trend moving in the right direction

For motorists, the trend is moving in the right direction. The average price of fuel has fallen steadily since November 6 and drivers in 45 states and the District of Columbia are now paying less than they were last week.

The price should continue to fall throughout the holidays, with AAA predicting a national average price of $2 by the end of the year. Even now, the average price is below the $2 threshold in 12 states.

For Thanksgiving travelers, the Central Plains states will be the most economical region to drive. The Western states remain the most expensive. The Southeastern states have seen prices rise slightly in recent weeks but remain a bargain, with five states – Texas, Mississippi, Alabama, South Carolina, and Tennessee – among the ten lowest-priced states in the U.S.

According to AAA, more than 43 million Americans will hit the road this Thanksgiving holiday. When they stop to fuel up, they'll find relatively cheap pric...

Gas prices drop, but are just getting back to normal

Speculators' hopes that OPEC can reduce the oil glut are fading

Consumers have seen gasoline prices drop sharply in the last week, falling more in some states than in others. But in point of fact, prices are just getting back to normal after speculation in the futures market added upward pressure in the two previous months.

The AAA Fuel Gauge Survey shows the national average price of gasoline is $2.16 a gallon after falling over the last 10 days. That's down a nickel from a week ago and nearly a dime lower than a month ago. But it is exactly in line with last year's national average.

“The abundance of crude oil in the global market is contributing to lower prices, and as a result, retail averages are the same price as compared to one year ago,” AAA said on its website.

Stong dollar helping motorists

Another factor is at play here as well. The U.S. dollar has strengthened significantly since Donald Trump's election a week ago and, since oil is priced in dollars, oil prices have begun to fall even more.

They were moving in the other direction in September and October as speculators bet that OPEC members, which are scheduled to meet at the end of this month, would agree to cap production, to drive up oil prices. Wall Street optimism for such an agreement is fading, and the latest data shows OPEC has increased production in recent weeks.

Less demand

There also tends to be less demand for gasoline during the month of November, and with refinery maintenance mostly completed, the outlook is brightening for falling fuel prices into the end of the year.

In some states, the price at the pump is absolutely in a free-fall. In the last week, Indiana saw its statewide average plunge 14 cents a gallon. It's down 12 cents in Ohio, 11 cents in Michigan, eight cents in Kentucky and Illinois, and seven cents in Nebraska and Oklahoma.

The statewide average is below $2 in nine states, with the lowest prices in Missouri and Oklahoma, both of which are reporting an average price of $1.88 a gallon.

Consumers have seen gasoline prices drop sharply in the last week, falling more in some states than in others. But in point of fact, prices are just gettin...

Why gasoline prices are likely to go down again soon

New report suggests oil prices will go lower before they go higher

Gasoline prices are still low by historical norms, but have been slow to drop on seasonal factors. Prices are usually lower in the fall and winter because there is less demand and it's cheaper to make winter-grade gas.

The reason prices have been slow to fall has been the crude oil market. Speculators have driven up the price because they believe OPEC is about to freeze production. Less oil on the market and the price goes up, the reasoning goes.

But is there a good reason to think OPEC is actually going to take the necessary steps to reduce supplies? A number of industry analysts have expressed strong doubt.

Oil production still at record highs

A new report from S&P Global Platts shows just the opposite of what speculators are banking on. The report shows OPEC production in October rose at another record, 33.54 million barrels a day. More oil, the report found, is coming on the market from Libya and Nigeria, where production has been limited by war.

Then there is Iran and Iraq, two Middle Eastern neighbors who are determined to pump more oil to compensate for years when either conflict or sanctions keep their oil off the world market.

"OPEC's freeze math has gotten more complicated, as its countries keep pumping more," said Herman Wang, senior writer for S&P Global Platts. "With OPEC having self-imposed a November 30 deadline to finalize the freeze, the pressure will be on to deliver a deal that the market views as credible. Progress towards that goal has been slow, and a fifth straight month of record high production won't help."

The math is further complicated by the fact that Libya and Nigeria would be exempt from any freeze. Increases in Iraqi output and the expected return of Angolan production will make it even harder.

U.S. has plenty of oil

The most recent report from the U.S. Energy Information Administration saw a huge increase in oil stockpiles, meaning the current oil glut is getting bigger. The S&P Global Platts report suggests the glut will continue to grow, regardless of what OPEC works out at the end of the month.

The AAA Fuel Gauge Survey shows retail gasoline prices remain fairly stable, but that's partly due to a sharp price increase in the last week in Georgia and North Carolina. Both states were affected by last week's explosion at a Colonial Pipeline facility.

But the good news for motorists is the interruption in fuel transport didn't last long and prices in those states should soon sink lower. Gasoline resumed its flow through the pipeline Sunday morning. Barring other distribution or refinery mishaps, lower oil prices should keep prices low at the gas pumps through the holidays and beyond.

Gasoline prices are still low by historical norms, but have been slow to drop on seasonal factors. Prices are usually lower in the fall and winter because...

Pipeline disruption in Southeast may be short-lived

Region likely to be spared rising fuel prices

Monday's explosion at a Colonial Pipeline facility in Alabama was a much worse mishap than the leak that occurred there in early September. The explosion killed one employee and injured seven others.

Footage from the scene showed the scope of the disaster, sending gasoline futures prices soaring, since gasoline prices throughout the Southeast surged when the pipeline had to be shut down for eleven days in September. The initial assumption was this interruption would be worse.

It's clear now that it might not be. Colonial said Tuesday that it believes it will be able to restart the pipeline by the end of the week, before the interruption in fuel supplies will be fully felt.

Gasoline futures went from being up 15% immediately after the explosion to now being up just 4%. Analysts say the effect to the overall gasoline market should be minor.

Retail price movement

However, some states in the affected region have already seen price movement at the pump. Georgia, which suffered the biggest price increase after the September pipeline incident, saw the statewide average price of gasoline rise three cents a gallon between Tuesday and Wednesday, according to the AAA Fuel Gauge survey. Its prices were only now getting back to normal.

In South Carolina, the statewide average, which has been consistently among the lowest in the nation, rose two cents a gallon overnight, from $2 a gallon to $2.02. Prices in other states in the region have not reacted in response to the pipeline accident.

Apparently, actual damage from the explosion was less than expected. Colonial said part of the delay in restarting the line is controlling the fire resulting from the explosion. Repair crews cannot get safe access to the site until the fire is out.

When a leak to the main pipeline occurred September 9, it stopped the flow of gasoline for eleven days, resulting in fuel shortages in Tennessee and rising prices in Georgia, the Carolinas, and Virginia.

Monday's explosion at a Colonial Pipeline facility in Alabama was a much worse mishap than the leak that occurred there in early September. The explosion k...

Another pipeline accident may send Southeast gas prices soaring

Incident occurred on the same pipeline at nearly the same location

Consumers in the Southeast U.S. had better brace for another spike in gasoline prices. Colonial Pipeline, which supplies gas stations in the region, has suffered another break, at almost the same location in Alabama that interrupted fuel flow in early September.

Colonial Pipeline issued a statement late Monday, saying one employee had been killed and seven others injured in an explosion at a pipeline facility in Helana County, Ala. The September leak also occurred in Helana County. The company said the cause of the explosion is under investigation.

Georgia-based Colonial Pipeline delivers more than 100 million gallons of refined products per day to outlets between Houston and New York City, serving more than 50 million people. It says its pipeline system consists of more than 5,500 miles of underground pipe and above ground storage tanks and pump stations.

Deja vu

When the pipeline was shut down for more than two weeks in September, gasoline prices surged in Georgia and some gas stations in Nashville ran out of fuel. Prices jumped significantly in South Carolina, North Carolina, and Virginia, states that normally have among the lowest fuel prices in the nation.

Ironically, Colonial Pipeline late last week issued a report on the September leak, saying it continues to work with state and federal environmental officials to lessen the harmful effects of last month's spill. Gasoline prices in affected states had just recently fallen to normal levels.

It is not unreasonable to expect gasoline prices in the Southeast to spike in the next days and weeks until the extent of the damage becomes known and the flow of fuel is restored. And it's very possible that prices outside the region will also be affected.

Gasoline futures prices rose 5% as soon as news of the pipeline explosion was reported. Higher futures prices often translate into higher wholesale prices for gasoline, which get passed along to consumers.

Gasbuddy senior analyst Patrick DeHaan Tweeted that gasoline prices trading on the NYMEX were up 11% on the news.

Consumers in the Southeast U.S. had better brace for another spike in gasoline prices. Colonial Pipeline, which supplies gas stations in the region, has su...

Gasoline prices cheaper than they were in 1966

But today's price should probably be even lower

During the 1960s, there was no OPEC and gasoline prices were pretty much the same, month in and month out. If prices climbed over 36 cents a gallon, consumers weren't very happy.

Could we be entering a similar pricing environment in the 21st century? Using an inflation calculator, we determined that 36 cents in 1966 is the equivalent of $2.71 today. So gasoline in most places is a lot cheaper than it was 50 years ago.

Today, the national average price of self-serve regular is $2.21 a gallon, according to the AAA Fuel Gauge Survey. That's the same as it was a week ago. It's also the same price as a month ago.

However, it is three cents a gallon more than at this time a year ago. For most of the year, 2016 gasoline prices have stayed well below the year-over-year price.

Prices should be lower

Many analysts think prices at the pump should be lower than they are, since the summer driving season has ended and stations have switched over the cheaper winter blend gasoline. The main reason the price decline has stalled has to do with the price of oil. It's remained just under $50 a barrel in recent weeks, higher than the going price 12 months ago.

“Drivers may continue to see prices wobble up and down as traders speculate on the possibility of OPEC countries developing an output agreement over the next month,” AAA said in a release. “Additionally, planned and unplanned refinery maintenance continues across the United States and may result in regional fluctuations in gas prices.”

Strategy backfired?

But just how reasonable an assumption is OPEC agreeing to limit production to raise oil prices? Saudi Arabia's calculated strategy of driving down oil prices as a weapon against U.S. shale producers has painted the cartel into a corner. Many members are struggling economically and can't afford to cut oil production in the short run in hopes that it will drive up prices in the long-run.

Iran and Iraq are not too keen on the idea either. Iran is just now getting its oil export business back on track after international sanctions were lifted. Iraq needs oil revenue to wage its fight against ISIS. Getting all parties to agree to limit production, and not cheat, may be a tall order. If it can't be done, then the oil glut remains and consumers will continue to pay the equivalent of 1960s gasoline prices -- maybe even 1950s prices.

Drivers in Missouri and Oklahoma are paying an average of $1.99 a gallon for gasoline. Even in the most expensive state for gasoline, Hawaii, the average price is still under $3 a gallon.

During the 1960s, there was no OPEC and gasoline prices were pretty much the same, month in and month out. If prices climbed over 36 cents a gallon, consum...

Why are gas prices going up?

The national average price has shot up eight cents a gallon in the last month

It's fall, when oil refineries are turning out cheaper winter-grade gasoline. Oil prices remain at $50 or less a barrel and supplies are ample.

So why is the price at the pump rising in many areas?

According to the AAA Fuel Gauge Survey, the national average price of self-serve regular is around $2.25 a gallon, up about two cents from a week ago and eight cents higher than a month ago. That's a big jump in 30 days, especially at a time when prices are usually headed lower.

While consumers might be wondering what's going on, it might not be a huge mystery after all. The increase in the national average may be largely a product of recent increases in the Southeast and Mid-Atlantic states, which normally have some of the lowest prices at the pump. Also, prices have risen sharply in recent days in parts of the Midwest, which can be volatile depending on refinery bottlenecks.

Lingering effects of pipeline leak?

A few weeks ago a leak in a gasoline pipeline in Alabama stopped the normal flow of fuel to these areas. Prices in South Carolina, among the cheapest in the nation, shot up nearly 20 cents a gallon. Prices also rose in Georgia, North Carolina, Tennessee, and Virginia.

The pipeline has long been repaired, but just as prices were getting back to normal, along came Hurricane Matthew last week. AAA reports Hurricane Matthew caused prices to again rise in some parts of the region, with Florida seeing an increase of six cents a gallon and prices in North Carolina going up four cents a gallon.

The hurricane created supply issues at many gas stations last week for a couple of reasons. Evacuation notices resulted in closed ports and terminals. Because of that, many gas stations simply could not handle the increased demand of drivers gassing up in advance of the storm.

Supplies remain plentiful

The good news? Despite all this turmoil, AAA says gasoline supplies in the Southeast remain plentiful.

Then there is the price of oil, which is now marginally higher than it has been for most of the year. Part of that is a product of speculators, who are betting that OPEC will cap production and begin to draw down the glut of oil that has existed for two years.

But it's far from a sure thing that OPEC will be able to pull that off. It hasn't been the most cohesive group in the past.

And even if it does manage to curtail supply, it has no control over U.S. shale operators, who would likely resume production at higher prices.

Heading into the winter, at least, consumers should see fairly stable gasoline prices below what they paid a year ago.

It's fall, when oil refineries are turning out cheaper winter-grade gasoline. Oil prices remain at $50 or less a barrel and supplies are ample.So why i...

Why OPEC's oil cap could be good news for America

Gas prices aren't going back to $3 a gallon anytime soon

The news that OPEC ministers have agreed in principal to capping production sent oil prices surging on world markets late Wednesday.

Bloomberg News reported the oil ministers, meeting in Algeria, agreed in principal to try to cap production at around 33 million barrels a day. For the first time in two years, the world's major oil producers appear to be on a path that would reduce output and raise prices.

But the consensus among industry analysts appears to be that this is no reason for consumers to panic. We're not going back to $3 a gallon gasoline anytime soon.

As CNBC reported, Goldman Sachs panned the OPEC move, suggesting it won't move prices much in the short run and will only raise them to around $53 a barrel next year.

Gregg Laskoski, senior petroleum analyst at GasBuddy, says he doesn't expect the OPEC move, which he says is more of a "framework" at this point, to have much impact at all. He notes that it would only be a reduction of 900,000 barrels a day. He also suggests that if higher oil prices become a reality, it could be a boost for American energy producers.

Welcome news for U.S. producers

“There's no doubt that a sustained rise in energy prices could be a net gain for U.S. energy producers in states like North Dakota, Oklahoma, Texas, Louisiana, Ohio and Pennsylvania, and perhaps a stimulus in those areas where energy production has been shut down,” Laskoski told ConsumerAffairs.

In fact, Investors Business Daily reported Wednesday that U.S. oil producers are already gearing up to increase production next year. It estimates that U.S. oil rigs in operation will average 579 for 2017, up nearly 30% from this year.

“Analysts forecast 11,151 new wells to be drilled next year, up 25% from the 8,915 wells expected to be started this year,” the publication reported.

So any reduction in output from OPEC is likely to be picked up by American producers, along with Russian operators. The oil glut might be reduced, but it isn't going away.

The result could be gasoline prices that rise by a few cents a gallon and stronger economies in oil producing states.

The news that OPEC ministers have agreed in principal to capping production sent oil prices surging on world markets late Wednesday.Bloomberg News repo...

Gasoline prices hold at $2.21 a gallon

Prices at the pump are showing remarkable stability

The pipeline leak in Alabama has been repaired and gasoline is flowing again, but some states in the Southeast are still feeling the effects of reduced supplies and higher prices.

Those rising prices have more or less offset the seasonal drop in prices elsewhere in the U.S., and the result is a remarkable stability in gasoline prices.

According to AAA, the national average price of regular gasoline is about $2.21 a gallon, within a penny of where it was the day before, a week ago, and even a month ago. A year ago, it was only seven cents a gallon more.

Prices are higher in the normally rock-bottom-priced Southeast, thanks to the leak in the Colonial pipeline in Alabama two weeks ago. Operations were restored last week. Analysts at AAA say it may take another week before prices return to normal.

But while prices are still higher than normal in Georgia, the Carolinas, and Virginia, drivers in 25 states are paying less at the pump week-over-week.

Below $2 a gallon

In fact, the average price is below $2 a gallon in five states; Texas, Arkansas, Mississippi, Louisiana, and New Jersey.

Meanwhile, the most expensive gasoline is found in states clustered in the West; Hawaii, California, Washington, Alaska, Oregon, and Nevada.

Drivers in four states are seeing gasoline prices go down from last week. They are paying three cents a gallon less in Wyoming, two cents less in Idaho and Utah, and a penny less in North Dakota.

Great Lakes volatility

The Great Lakes region remains the most volatile part of the country for fuel prices. Refinery issues can spike prices overnight and, as an added issue, the region is somewhat dependent on gasoline moved through the Colonial pipeline.

While gasoline prices have remained fairly stable over the last couple of weeks, the seasonal pattern is for gasoline costs to steadily decline into the end of the year. Despite the recent pipeline problems, AAA expects that pattern to hold.

The X-factor continues to be the price of crude oil, which has also remained steady lately, between $45 and $50. Analysts will be keeping an eye on OPEC's next meeting, where Saudi Arabia may finally agree to a production freeze, which would likely boost the cost of crude oil.

The pipeline leak in Alabama has been repaired and gasoline is flowing again, but some states in the Southeast are still feeling the effects of reduced sup...

New rule could curb oil speculators

Fed proposal could make gas prices less volatile in the future

In a little noted action Friday, the Federal Reserve published a proposed rule that it said would toughen the existing requirements and limitations placed on  investment banks and some other traders who speculate in the commodities market.

The Fed said it is proposing the action because of its concerns over potential “catastrophic, legal, reputational, and financial risks” these firms could suffer, possibly posing system risks to the financial system. Most likely policymakers have in mind the trading in mortgage backed securities that blew up in 2008.

The Fed notes that it is only a limited number of firms that engage in physical commodity trading. Still, it sees cause for concern.

“The possibility of an environmental accident due to these activities presents significant risks to the firms,” the Fed said in announcing a public comment period on the proposal.

Good for consumers

While the Fed is more concerned about the health of the financial system and the integrity of the firms that participate, consumers may have reason to cheer the proposal as well.

That's because it would make it more expensive for speculators to bid up the price of commodities, in particular oil. Lately, that hasn't been much of a problem, but in the past it was.

When the market believed that rapid growth in China and other developing nations would compete for limited oil supplies, the price of oil soared well over $100 a barrel in 2008, resulting in a national average gasoline price that topped $4 a gallon in July.

Could reduce future oil speculation

Since oil prices collapsed in 2014, speculators haven't been nearly as active in the oil market. The Fed rule, if enacted, would likely limit their activity in the future.

Speculators have been largely absent from the oil market since late 2014 because there has been little evidence that oil prices will sharply rebound. Crude oil is trading below $50 a barrel, less than half its all-time high.

The Fed rule would require participating companies to increase the amount of money they have in reserve when they deal in commodities activity, limiting the amount of trading activity they would have for physical commodities.

It would also establish greater transparency, requiring firms to expand reporting on the nature and extent of their physical commodity holdings and activity.

In a little noted action Friday, the Federal Reserve published a proposed rule that it said would toughen the existing requirements and limitations placed...

Why you probably shouldn't be filling up with premium gas

A report from AAA says that doing so is a waste of money for most U.S. drivers

The American Automobile Association (AAA) has released a new report with a simple message for the majority of U.S. drivers: stop wasting money on premium gasoline.

According to the organization’s survey, many consumers have the incorrect notion that buying premium fuel for their vehicle can increase its performance. However, for the vast majority of cars, it doesn’t – and this has made an impact on consumers’ wallets. The survey found that 16.5 million U.S. drivers spent an additional $2.1 billion on premium gasoline that they didn’t need to in the past year.

“Drivers see the ‘premium’ name at the pump and may assume the fuel is better for their vehicle. . . AAA cautions drivers that premium gasoline is higher octane, not higher quality, and urges drivers to follow the owner’s manual recommendations for their vehicle’s fuel,” said John Nielson, AAA’s managing director of Automotive Engineering and Repair, in a statement.

Paying extra

The survey shows that the vast a majority of cars on the road only require regular fuel (87-octane) in order to run optimally. Researchers found that around 70% of the cars being used are best served by this fuel type. Only around 16% of vehicles benefit from filling up with premium, 93-octane fuel, while the remaining 14% require at least a mid-grade fuel or run using an alternative fuel source.

Knowing which type of fuel your car needs can save you a lot of money in the long-run. The report released by AAA shows that fuel prices between regular and premium gas differed by 49.33 cents per gallon between August, 2015 and August, 2016. That’s a price discrepancy of around 23%.

Perhaps one of the few times that drivers should ever consider using a higher-octane fuel is if their area or region is experiencing a gas shortage, much like the one that parts of the East coast are seeing due to a pipeline leak. The rest of the time, it’s acceptable to go by your driver’s manual and use the recommended fuel type.

The American Automobile Association (AAA) has released a new report with a simple message for the majority of U.S. drivers:...

Pipeline break sends gas prices soaring in the Southeast

There were lines at Nashville gas stations over the weekend

Over the weekend, there were lines at gas stations in Tennessee as many stations ran out of fuel. Meanwhile, gasoline prices soared in wide areas of the Southeast.

This flashback to the late 1970s comes courtesy of a leak in Line 1 of the Colonial Pipeline, which carries fuel between Houston and High Point, N.C. and supplies Georgia, Tennessee, South Carolina, North Carolina and Virginia.

It will be several more days before supplies return to normal, but in a Tweet over the weekend, Colonial reported that its crews had started construction of a bypass line to carry fuel around the leaking section, in an effort to restore service as soon as possible.

The supply interruption has had a dramatic impact on prices at the pump in the affected states, some more than others. While stations in the Nashville area completely ran out, prices at stations in Georgia surged over the weekend.

Georgia prices soar

According to the AAA Fuel Gauge Survey, the statewide average gasoline price in Georgia jumped from $2.19 a gallon on Saturday to $2.31 today. A week ago, Georgia motorists were paying an average of $2.10 a gallon.

In Atlanta, the price inflation is much worse. The average price in Atlanta is $2.46 a gallon, up from $2.17 a week ago.

Motorists in North Carolina have also seen a dramatic price movement. The statewide average gas price is $2.16 a gallon, up from $2.05 a week ago. Prices in the Charlotte area are up 16 cents a gallon in the last seven days.

Less severe in Virginia

Patrick DeHaan, senior analysts at GasBuddy, says the impact in Virginia will likely be less severe, but thinks the average price could go up as much as 15 cents a gallon if the supply interruption drags on.

“It won’t likely be an all-at-once spike, but rather a penny here and there, or maybe more,” DeHaan said in an email to ConsumerAffairs. “The extent should be a bit more limited than other areas, but much of the degree of severity of depends on events unfolding now.”

The pipeline leak underscores the fragility of the nation's fuel distribution system, and how issues at refineries or pipelines can affect the price at the pump, at least on a temporary basis.

States not dependent on the Colonial pipeline are currently enjoying falling fuel prices, but that could easily change in the next few days, since the gasoline futures market is currently soaring, raising the wholesale price of gasoline everywhere.

Over the weekend, there were lines at gas stations in Tennessee as many stations ran out of fuel. Meanwhile, gasoline prices soared in wide areas of the So...

East Coast could face gas shortage, rising prices

Colonial Pipeline leak taking longer to repair than first estimated

A pipeline leak in Alabama may bring back a bad memory from the late 1970s for consumers on the East Coast – surging gasoline prices and stations that run out of fuel.

The good news – the price spike shouldn't last that long. On the other hand, when speculators get involved, as they did after 2005's Hurricane Katrina, the long term effect on prices can be hard to predict.

Already the gasoline futures market has responded with a rise in prices. In a Tweet, GasBuddy senior analyst Patrick DeHaan predicted prices at the pump could rise between five and 15 cents a gallon in Georgia, North Carolina, Tennessee, and Virginia, and as much as 20 cents a gallon in South Carolina. He says some station tanks may run dry.

Week-long shutdown

A week ago the Colonial Pipe, which is the main transporter of gasoline and diesel fuel from Houston to the East Coast, suffered a leak in rural Alabama and had to be shut down.

Now, engineers say it may be another week before the leak is repaired and the fuel can start flowing again. That could result in a significant draw-down in supplies in areas served by the pipeline, resulting in price hikes and possible shortages.

At the same time, Reuters reports BP will conduct major maintenance this weekend at its Whiting, Indiana refinery, reducing its output by as much as half. So, as oil prices have been fairly soft this week, the outlook is for gasoline prices to move in the other direction, at precisely the time they normally start to fall.

Low-priced states hit first

For consumers in the most-affected states, the saving grace is the fact they are starting out with some of the lowest gasoline prices in the country. South Carolina, expected to be the hardest-hit state, currently has the lowest prices in the nation, with a statewide average of $1.94 a gallon. The price is $2.02 in North Carolina and $1.98 in Virginia.

Meanwhile, Georgia Governor Nathan Deal has declared a state of emergency, allowing the suspension of federal rules and regulations that limit the hours of operation that commercial vehicles may be in use.

A pipeline leak in Alabama may bring back a bad memory from the late 1970s for consumers on the East Coast – surging gasoline prices and stations that run...

Gas prices falling again as refineries switch to winter fuel

Government predicts $1.92 a gallon national average by year's end

Now that we're past the summer driving season and cooler temperatures are on their way, the price of gasoline is falling again, the way it normally does this time of year.

But the biggest catalyst is the switch-over to winter grade gasoline at the nation's refineries. That blend is cheaper to produce and that's usually reflected in the price at the pump. The switch-over at most refineries will take place this week.

According to the AAA Fuel Gauge Survey, the national average price of self-service regular is 2.18 a gallon, down a penny from a week ago but up six cents from a month ago. That's because gas prices rose in the last couple of weeks to reflect a sudden rise in oil prices, suggesting market forces could start producing some volatility in the seasonal prices of gasoline that has been largely absent for the last two years.

Icahn warns of market manipulation

Interviewed this week on CNBC, investor Carl Icahn, who owns a huge stake in an independent refinery, charged that a combination of government regulations and Wall Street speculation would put small refineries out of business. That would consolidate pricing power in the hands of the major players, he said.

“Because what's going to happen is a lot of these refineries are owned by foreign entities,” Icahn told the network. “And they're going to push gasoline prices up double and triple and hurt our economy.”

But in the short run, AAA predicts prices will slowly drift lower as we head into the fall, as long as crude oil prices don't spike.

Without getting too technical, winter-blend gasoline is cheaper because it is made to evaporate at lower temperatures. Making the summer blend fuel, that evaporates at a higher temperature, is more costly.

Short term outlook

In its Short Term Energy Outlook, the Energy Information Administration predicts oil prices will remain at current levels and retail gasoline prices will dip to an average of $1.92 by the end of the year.

In fact, AAA reports seven states are already selling gasoline at or below a state-wide average of $2 a gallon. They include South Carolina, Alabama, Mississippi, New Jersey, Texas, Tennessee, and Virginia.

In recent days, prices have fallen most sharply in Indiana, Michigan, Ohio, Kentucky, Nebraska, Maryland, and Minnesota.

Now that we're past the summer driving season and cooler temperatures are on their way, the price of gasoline is falling again, the way it normally does th...

What to expect at the gas pump over Labor Day weekend

Prices are rising but are significantly lower than last year

Motorists hitting the road for a Labor Day weekend excursion will find rising gasoline prices in most regions of the country, as higher oil prices have their effect. Still, prices are generally lower than at this time last year.

According to the AAA Fuel Gauge Survey, the national average price of self-serve regular is $2.22 a gallon, up nearly three cents from last week and nine cents higher than a month ago. But compared to this time last year, gasoline is about 23 cents a gallon cheaper.

The national average price of diesel fuel is $2.36 a gallon, up two cents in the last seven days but down 20 cents from a year ago.

The West is more expensive

This weekend, motorists in the western states will face the highest prices. The statewide average is $2.68 a gallon in California and $2.64 a gallon in Washington state.

Prices at the pump have also risen sharply in recent days in Michigan, where the statewide average is $2.35 a gallon. Pennsylvania drivers are paying an average of $2.34.

As usual, the cheapest fuel prices are found in the Southeast. South Carolina's average gas price is $1.96 a gallon and Alabama's is $1.99. Mississippi's average price is right at $2.

Consumers can't really complain, since gas prices have remained stable over the summer in spite of what we now know to be significant demand. In a Tweet, Patrick DeHaan, senior analyst at Gas Buddy, notes the government's latest numbers for June show record demand for that month, beating the previous record set in 2007, just before the start of the Great Recession.

55% of us hitting the road

AAA estimates 55% of Americans will take a road trip over the Labor Day weekend to take advantage of lower fuel prices. It says Americans may purchase as much as 400 million gallons of gasoline over each of the three days.

Where do prices go from here? AAA says there are a couple of things to keep an eye on. The price of crude oil is approaching $50 a barrel again, and that could keep prices elevated more than usual during the fall. There is also the threat of tropical storms in the Gulf Coast states, which could affect refinery operations.

All things being equal, however, the significant glut of oil still on the world market should keep prices within check as refineries switch over to cheaper winter-grade fuel.

Motorists hitting the road for a Labor Day weekend excursion will find rising gasoline prices in most regions of the country, as higher oil prices have the...

Oil prices keep trying to push higher

What's that going to mean for gasoline prices?

Motorists are still enjoying relatively low gasoline prices, but they should keep a wary eye on the price of oil. This week it has marched consistently higher, with Brent crude now topping $50 a barrel.

That's significant because the main reason gas prices are so low is the over-abundance of crude oil. For the last two years, Saudi Arabia has been trying to put U.S. shale oil producers out of business, and it has been fairly successful. The result has been a huge oversupply of oil and falling prices.

But the latest data from the Department of Energy shows the glut of oil is getting smaller and the market has responded by bidding up the price of crude oil, expecting it will go even higher once OPEC goes back to normal production.

Bull market for oil

According to Business Insider, oil is about to re-enter a bull market phase, which could be bad news for consumers. In a bull market, the smart money bets a commodity will go higher, and the inflow of cash usually guarantees that result.

One only has to look back to 2008, when the U.S. was already in a recession, but traders were convinced oil prices would keep going up – and they did, topping out well over $100 a barrel in July of that year.

The Business Insider report cites four reasons why it thinks oil prices will keep going up; a weak dollar, a strong likelihood OPEC will trim production; falling U.S. stockpiles; and hedge funds now sense a change in direction.

That last one could be huge. Once hedge funds start buying oil futures, look out. Prices could quickly escalate.

Gas prices react

Already, gasoline prices have started to react. The AAA Fuel Gauge Survey shows the national average price of self-serve regular is $2.14 a gallon, up a penny from the day before and up two cents from seven days ago.

Still, that price is six cents lower than a month ago and – providing some perspective – 51 cents lower than a year ago. So even a sharp move higher in oil prices shouldn't drive gasoline prices to a level where drivers feel pain.

In 2008, the national average price at the pump topped out at more than $4 gallon. That's not likely to happen again for one simple reason. The U.S. oil industry, which has basically gone into hibernation the last two years, can quickly spring to life should oil prices reach the level where it is profitable for them to do so.

Fortunately for consumers, that price isn't much higher than the current price of oil.

Motorists are still enjoying relatively low gasoline prices, but they should keep a wary eye on the price of oil. This week it has marched consistently hig...

How much are you really saving at the gas pump?

Gasbuddy survey finds consumers could be pocketing a lot more

Gasoline prices are lower for this time of year than they have been in recent memory. Consumers should be pocketing significant savings.

But are they? Gas price website GasBuddy surveyed consumers' fuel-purchasing habits and has concluded that consumers may be saving, but they are actually paying more than they should.

The biggest threats to consumers, the site claims, are procrastination, craving convenience, and being creatures of habit.

How can following long-established habits hurt? Gasbuddy found that an overwhelming majority of consumers – 76% – go to the same station to fill up on a regular basis. They do so because they believe it has the lowest price, but often it doesn't, and they don't bother to find out.

Smart shopping

“Make sure you’re shopping smart and checking that your go-to fill-up spot is, in fact, the cheapest,” said Vera Gibbons, senior consumer analyst at GasBuddy. “You never know when a nearby station is running a promotion or may have changed its pricing strategy, so always double-check.”

Another money wasting habit is waiting until the gas gauge hits empty before filling up again. If you wait until you're running on fumes, price become less important. You just want to get some fuel in your tank, regardless of what it costs.

“According to our research, most people can save around 20 to 30 cents per gallon by shopping around for the cheapest station within a city. In some cities like Chicago, Los Angeles, Seattle and Washington, D.C., the savings could be upwards of 70 cents per gallon,” Gibbons said.

But who takes the time to do that when the gas gauge needle is hovering over “E?”

Why didn't the motorist cross the road?

Other consumers are overpaying for fuel because they refuse to cross the road. The survey found 40% of respondents choose a gas station based on location, while 14% admit to choosing a station depending on how easy it is to get into.

Convenience also enters into the money-wasting equation when a station offers a cash discount but the consumer pays with plastic. Admittedly, it's a pain to go inside the station and pre-pay with cash for the gas. But those who do so might save up to 15 cents a gallon, Gibbons says.

“Paying with cash might be less convenient for those who only carry cards, but it’s a simple way to save some extra money,” she said.

Even so, the survey found 86% of consumers buy gasoline with a credit or debit card.

With gas prices historically low, some consumers are paying a little more for a premium grade of gasoline. Twelve percent of consumers in the survey admitted to doing that.

That's a big money-waster, Gibbons says. Unless a manufacturer specifically requires premium fuel, 87 octane will work just fine.

Gasoline prices are lower for this time of year than they have been in recent memory. Consumers should be pocketing significant savings.But are they? G...

Gas prices falling farther, faster than in typical summers

Refineries are increasing supplies while oil prices fall

Heading into August, motorists will enjoy prices at the pump that are, on average, about 55 cents a gallon cheaper than a year ago. It should make that trip to the beach a little less expensive.

According to AAA, abundant fuel supplies across the U.S., coupled with falling crude oil prices, caused prices to fall in 47 states last week, led by big declines in the Midwest. However, Gasbuddy senior analyst Patrick DeHaan tweeted today that prices appear to be rising in Ohio and Michigan.

And while California's gasoline prices remain among the most expensive in the nation, motorists there are paying $1 a gallon less than they were a year ago.

The AAA Fuel Gauge Survey puts the national average price of self-serve regular at $2.19 a gallon, down four cents from a week ago. The national average price of diesel fuel is $2.32 a gallon, down two cents in the last week.

Hawaii most expensive, South Carolina cheapest

The most expensive gasoline is now found in Hawaii, with a statewide average price of $2.78 a gallon. California is next, at $2.75 and then Washington and Alaska, in a tie at $2.63.

The cheapest place to fill-up is South Carolina, where the statewide average has plunged to $1.84 a gallon. It's $1.90 in Alabama and $1.92 in Tennessee.

According to AAA, more than one-third of gas stations in the U.S. have gasoline priced at $2 a gallon or less. Last month at this time, only 7% of stations had dropped their prices to that level.

The AAA analysis predicts fuel prices will remain low for the rest of the summer. In the fall, when refineries switch back to winter grade gasoline, prices normally head even lower. There is nothing on the horizon that would alter that pattern.

Swimming in crude oil

Normally, the summer months are marked by a huge uptick in demand. But U.S. stockpiles of crude oil are at their highest level for this time of year in 86 years. The U.S. may be producing less oil, but refineries have been busy converting the surplus stockpiles into gasoline.

The American Petroleum Institute last week reported June fuel deliveries for June were up 3% over 2015, reaching the highest level in nine years.

Heading into August, motorists will enjoy prices at the pump that are, on average, about 55 cents a gallon cheaper than a year ago. It should make that tri...

Gasoline prices at 12-year low for July

Plentiful supplies and low oil prices giving motorists a windfall

July is dead center in the summer driving season. Whether it's a quick trip to the beach or an extended road trip, it's when many families pack up and hit the road.

As such, gasoline demand normally rises in July, and so do gasoline prices. But this is not a normal July.

Even though prices have risen off their early-winter lows, they are well below seasonal norms and are headed still lower, at a time they usually peak. The AAA Fuel Gauge Survey shows the national average price of self-serve regular is $2.18 a gallon, its lowest level in July since 2004 and 55 cents less than a year ago.

Falling prices are attributed to abundant supplies in most areas of the country and soft crude oil costs.

Prices lowest in South Carolina

In areas of the southeast and southwest, gasoline prices are well below the $2 a gallon mark. In South Carolina, the state-wide average price is $1.86 a gallon. Tennessee, Alabama, and Missouri have an average price of $1.95 a gallon.

The western states remain the most expensive for gasoline, with California leading the way at an average pump price of $2.83. But there's a silver lining; last year, western gasoline prices were a lot higher.

California drivers are saving more than $1 per gallon on average compared to a year ago. Gasoline in Alaska is 82 cents cheaper. In Nevada, it costs 71 cents a gallon less to fill up.

Low prices for a while longer

Refineries are running more smoothly this summer, which has helped prices remain cheaper than a year ago. If those conditions remain, AAA predicts gasoline prices will stay relatively low for the rest of the summer.

The price of oil helps. Right now U.S. oil stockpiles are up about 13% year-over-year, while supplies of gasoline have increased to 240 million barrels, despite increased driving. The Department of Energy says that's the largest gasoline supply ever recorded in July.

July is dead center in the summer driving season. Whether it's a quick trip to the beach or an extended road trip, it's when many families pack up and hit ...

What consumers are doing with their gas price savings

A Chase survey paints different picture than earlier projections

After nearly two years of relatively-low gasoline prices, U.S. consumers have saved a lot of money at the gas pump. The Energy Information Administration (EIA) has estimated consumers saved about $700 last year.

What they did with it is the million dollar question. Many economists assumed the savings would significantly boost the economy as consumers used their savings to satisfy pent-up demand. It hasn't worked out that way, as consumer spending hasn't risen that much.

So where is the money going? JP Morgan Chase conducted a survey of one million consumers to find out.

A 1% pay raise

 The Chase report relies on a survey of Chase customers in 23 states. It found middle-income households spent about $480 less on gas in 2015 than in 2014. For 60% of households, that's the same as getting a 1% pay raise.

Of course, gasoline prices varied across the country. They were low in Oklahoma and Texas but fairly high in California and Nevada. All that was figured into the equation.

The report looked at gas spending and savings, the consumers most and least impacted, and how lower gas prices affected consumer spending.

The research found that households spent over $200, which is 45% of their gas savings, on things other than gasoline. They were most likely to spend the money at restaurants and retail merchants.

Spent a lot of it at gas stations

In an interesting finding, housesholds spent over $150 of their gas price savings at gas stations. This could mean a couple of things.

First, it could mean they bought more gasoline – perhaps for trips they might not have taken when prices were higher.

But they might have also been more inclined to go inside and purchase a beverage or snack – something they would have hesitated to do when gas prices were higher.

Chase notes that the results of its research, based on actual credit and debit card use, differ from previous estimates based on aggregate data. Those projections suggested consumers were banking their gas savings or paying down credit card debt.

So why hasn't there been a more significant boost to the economy? Who's to say there hasn't been?

True, the U.S. economy has been barely growing, but at least it's growing, while much of the rest of the world is slowing. It could be the impact of lower gasoline prices has been more keenly felt in the U.S., and the spending from the savings has simply helped the economy stay afloat.

After nearly two years of relatively-low gasoline prices, U.S. consumers have saved a lot of money at the gas pump. The Energy Information Administration (...

West Coast refineries least efficient in the nation

Is that why California motorists pay the most for gasoline?

Published reports from several media sources say California Attorney General Kamala Harris is investigating the persistently high gasoline prices in her state and has issued subpoenas to oil refineries that supply the region. Neither the attorney general's office nor any refineries have commented on the reports.

California gasoline prices are the highest in the nation, according to the AAA Fuel Gauge Survey. While in the past California fuel prices have always been among the most expensive, Hawaii and Alaska almost always had more expensive gasoline.

But according to AAA, California motorists are currently paying an average of $2.90 a gallon for self-serve regular, compared to $2.82 in Hawaii and $2.67 in Alaska. The national average is $2.28 a gallon.

Patrick DeHaan, senior petroleum analysts for GasBuddy, says California's high prices could well be linked to lower than normal refinery capacity on the West Coast. He notes that for much of May and June, refinery utilization has lagged behind for the rest of the country.

Lowest output in the nation

Low refinery utilization means refineries are producing less gasoline, leading to tighter supplies and thus, higher prices. DeHaan says that West Coast refinery utilization hit a low of 82.6% on June 10. At the same time, East Coast and Gulf Coast refineries were operating at 90.6% capacity, Midwest refineries were at 93.2%, and Rocky Mountain refineries were leading the nation at 97.2%.

“Not a real good reason comes to mind why West Coast refinery utilization should be lower than the rest of the country,” DeHaan told ConsumerAffairs.

Low refinery utilization will affect retail gasoline prices, but DeHaan says the impact is hard to measure.

“When a refinery goes down is when it hits the most, and one must beg the question, if there were more gasoline being supplied and thus more gasoline in inventories during an outage, there would not be nearly the price shock Californians have become used to, or price spikes would be shorter lived, like those in the Great Lakes,” he said. “But then again, the Great Lakes region can receive supply from other places.”

The most recent figures show the West Coast's current refinery capacity is at 96%, but still trailing the rest of the nation.

Published reports from several media sources say California Attorney General Kamala Harris is investigating the persistently high gasoline prices in her st...

Independence Day weekend could bring some traffic jams

AAA projects record travel over the holiday weekend

If you are traveling this Independence Day weekend – and the odds say you will be – you can expect some crowded highways.

According to the latest projections from AAA, some 43 million Americans will travel over the weekend – a record for July 4th – about five million more than traveled over the Memorial Day weekend.

Marshall Doney, CEO of AAA, credits historically low gasoline prices for the increase in travel. It also helps that Independence Day this year falls on a Monday, making for a natural three-day weekend.

Doney estimates U.S. drivers have pocketed about $20 billion in savings on gasoline so far this year compared to the same period in 2015. He expects they are now ready to spend some of it.

“We are well on our way for 2016 to be a record-breaking year for summertime travel,” he said. “This trend is welcome news for the travel industry and a sign that Americans are taking to our nation’s highways and skies like never before.”

No jump in prices expected

Despite the expected increase in gasoline demand, consumers may continue to enjoy soft prices at the pump for a while. Gasbuddy senior petroleum analyst Patrick DeHaan Tweeted over the weekend that the Brexit vote last week has already pushed the wholesale gasoline price down six cents a gallon.

The AAA Fuel Gauge Survey shows the national average retail price of self-serve regular started the week at $2.30 a gallon and is likely to be even lower by the weekend. Today's price is down three cents from a week ago and is 47 cents lower than this time last year.

South Carolina has the nation's lowest average gasoline price, right at $2 a gallon. California has the highest, with prices rising in recent days to an average of $2.90 a gallon.

Most of this coming weekend's travelers will be on the nation's highways. According to AAA, 84% of travelers will drive to their destinations, a 1.2% increase over last year.

With lower-than-usual airfares, air travel is projected to rise 2.2% over last year's numbers, with 3.3 million people crowding U.S. airports.

If you are traveling this Independence Day weekend – and the odds say you will be – you can expect some crowded highways.According to the latest projec...

Gas prices headed lower

The biggest declines are occurring in the Midwest

Just in time for the official start of summer, gasoline prices are headed lower again. After steadily rising since March, the national average of self-serve regular appears to have peaked.

The AAA Fuel Gauge Survey reports that the national average price is $2.33 a gallon, down about four cents from a week ago. Prices are falling even faster in parts of the Midwest.

In fact, the dramatic price declines in Michigan and Ohio may be mostly responsible for pulling the national average price lower. The statewide average price of gasoline in Ohio is down 18 cents in the last seven days. It's 14 cents lower in Michigan.

And prices in the region may go even lower. Over the weekend, Gasbuddy senior petroleum analyst Patrick DeHaaan Tweeted advice to motorists not to fill their tanks just yet.

“ALERT: Motorists in Great Lakes should AVOID filling their tanks completely as #gasprices in MI/IN/OH/WI should fall 10-30c over next 2 wks,” DeHaan wrote.

In truth, prices in the Midwest had raced far ahead of the national average after there were reports of refinery issues in Michigan. Whatever problems there were got quickly resolved, so supply issues did not materialize.

However, AAA notes that before they began their dramatic decline, gasoline prices in the Midwest were rivaling averages typically experienced by drivers on the West Coast.

Oil prices may have peaked, for now

Also putting downward pressure on prices at the pump is a recent decline in crude oil prices. After nudging past $50 a barrel, oil prices were down about 2% last week.

Demand has risen steadily and the huge glut of both oil and gasoline has gotten smaller, but supplies are still plentiful and U.S. production, which has been suspended amid falling prices, can quickly resume.

Gasoline prices are following recent seasonal patterns. After rising at the end of the winter, as refineries perform maintenance and switch over to summer gasoline blends, prices usually begin falling again as the Independence Day holiday approaches. That appears to be what is happening this year as well.

According to the latest from AAA, the cheapest gasoline in the nation can be found in South Carolina, where the statewide average is $2.03 a gallon. The most expensive fuel is still found in California, where the statewide average is $2.85 a gallon.

Just in time for the official start of summer, gasoline prices are headed lower again. After steadily rising since March, the national average of self-serv...

Drivers beware! Investors are buying oil again

So, what does that mean for the low gas prices we've been enjoying?

For consumers, the last two years have been “the good old days” when it comes to gasoline prices. A growing glut of oil on the world markets led to huge price declines. That, in turn, dropped gasoline prices from more than $3 a gallon to below $2 a gallon in just over a year.

That move also accomplished something else. It drove most investors out of the oil futures market. In the parlance of Wall Street, oil became a “bear market,” meaning the bet was prices would go down, not up.

That turned out to work well for consumers, since low, stable oil prices kept downward pressure on prices at the pump.

$50 a barrel

But lately, oil prices have been trending higher. After hitting a low of around $25 a barrel early in the year, prices are now back to the $50 level. And according to Reuters, that's drawing investors back into the futures market.

"In the end, you will see global oversupply, at some point diminish, and in effect even earlier than speculators realize," ABN Amro chief energy strategist Hans van Cleef told the news agency.

The return of speculators to the oil market could be a bad sign for consumers. Speculators helped drive the price of oil to over $120 a barrel in July 2008. It took the financial crisis and Great Recession a few months later to bring prices crashing back to earth.

The truth is, the oil glut has diminished a bit in recent weeks. U.S. producers have shut off the tap at a time when minor disruptions have occurred in Canada and Nigeria. As a result, there has been a more “bullish” outlook for oil prices.

Noticing it at the gas pump

Consumers have probably noticed it at the gas pump. According to AAA, the national average price of gasoline is $2.36 a gallon, up 16 cents from a month ago. However, it is still quite a bit less than it was at this time last year, when the price averaged $2.74 a gallon.

AAA says oil prices aren't the only factor pushing up prices at the pump. Drivers have increased demand, which is projected to reach record highs over the course of the summer. The auto club's analysis warns that a refinery problem or two could lead to a spike in fuel prices. Otherwise, it expects no major increase in prices.

There is something else that could keep oil prices – as well as gasoline prices – from rising too quickly. While the short term oil glut has gotten smaller, it could increase again very quickly if U.S. production ramps up again. And higher prices could provide incentive for it to do that.

Oil market investors undoubtedly know that, which could temper their enthusiasm for going all in on oil's rebound. As a result, moderate fuel prices could be around for a while longer.

For consumers, the last two years have been “the good old days” when it comes to gasoline prices. A growing glut of oil on the world markets led to huge pr...

Where did the oil price savings go?

Very few signs of savings going back into the economy

The price of oil has approached $50 a barrel in recent days, a recent high but only half of what it was nearly two years ago.

In that time, consumers and businesses have enjoyed low fuel prices, reducing the cost of a fill-up, as well as drastically reducing businesses' transportation costs.

Oddly, the expected benefit from that to the economy hasn't shown up. Consumer spending has ticked up slightly, but much of that is attributed to a belated rise in wages.

Now, an economic team at Citigroup has issued a report saying it is hard-pressed to find evidence of lower oil prices benefiting businesses. In a note quoted by Bloomberg News, Citigroup Chief Global Equity Strategist Robert Buckland and Strategist Mert Genc said that even though companies are spending less on energy, it isn't helping the bottom line.

"Investors were hoping that lower oil prices would boost earnings expectations in other consumer-oriented sectors, even if with a lag," the team wrote. "But these upgrades never really came through."

Airline profits have been among the strongest, helped no doubt by lower fuel costs. But industry analysts have attributed the strength to heavier passenger loads, as well as fees that continue to supplement fares.

Consumers not spending that much

With more money in consumers' pockets, there was some expectation that retail and consumer discretionary businesses would thrive. But retail profits have struggled and consumer spending hasn't lived up to expectations.

What are consumers doing with the money they save at the gas pump? The Citigroup analysts point out that the savings rate has increased in recent months, suggesting consumers are using the break to build up their rainy day funds.

One sector of the economy does appear to be attracting some of the dollars consumers are saving on fuel: the auto industry. At the end of last year Kelley Blue Book's Karl Brauer noted that car and truck sales had surpassed recovery mode and moved into record territory.

While some predicted car sales would level off in January, they continued to rise each month until May, when they dipped slightly.  

The price of oil has approached $50 a barrel in recent days, a recent high but only half of what it was nearly two years ago.In that time, consumers an...

Memorial Day weekend gas prices well below last year

AAA reports the national average price is down 44 cents from last Memorial Day

Gasoline prices are rising and have reached their highest level so far in 2016. But despite that, motorists hitting the road this Memorial Day weekend will encounter pump prices well below last year.

The national average price of self-serve regular is $2.30 a gallon, according to the AAA Fuel Gauge Survey. But at this time last year, it was 44 cents higher – $2.74 a gallon.

Gasoline prices have risen over the course of the late winter and early spring as they have each year, as refineries perform routine maintenance and switch over to production of summer gasoline blends. The rise has been slower this year, thanks to soft oil prices.

Oil prices have spiked a bit in recent weeks, due to production slowdowns in some oil producing nations. But industry analysts say any increase will likely be temporary since the world remains oversupplied with oil.

Peaking around Memorial Day

Prices normally peak around Memorial Day, the start of the summer driving season. AAA says drivers are likely to pay the least amount for gasoline since 2005 this year.

An estimated 38 million Americans will travel over the holiday weekend, which would be an increase of 700,000 compared to a year ago. Even more consumers are likely to travel by car, since long lines at the nation's busiest airports have discouraged air travel.

Here are the states where motorists will find the cheapest gasoline:

  • Mississippi ($2.06)
  • Texas ($2.07)
  • South Carolina ($2.08)
  • Arkansas ($2.08)
  • Missouri ($2.08)
  • Louisiana ($2.08)
  • Oklahoma ($2.10)
  • Alabama ($2.10)
  • New Jersey ($2.14)
  • Kansas ($2.15)

Here are the states where motorists will pay the most for gasoline:

  • California ($2.80)
  • Hawaii ($2.66)
  • Washington ($2.59)
  • Alaska ($2.58)
  • Michigan ($2.51)
  • Ohio ($2.51)
  • Nevada ($2.49)
  • Idaho ($2.45)
  • Illinois ($2.44)
  • New York ($2.43)

AAA reports this is the first time since last August that drivers in every state and Washington, D.C. are paying averages above $2 per gallon.

Gasoline prices are rising and have reached their highest level so far in 2016. But despite that, motorists hitting the road this Memorial Day weekend will...

Summer gasoline demand could reach record levels

But AAA says ample supply should keep prices in check

With gasoline prices leveling off after climbing over the late winter and early spring – and supplies getting even larger – look for more crowded highways this summer.

While noting that prices at the pump had unexpectedly moderated in the last week, AAA reported this week that the demand for gasoline reached its fourth-highest weekly estimate for 2016, weeks before the Memorial Day weekend and the official start of the summer driving season.

“Refineries nationwide are ramping up production, which should help increase supplies in regional markets,” AAA said in its weekly report. “This is good news for the average driver, because if supply can keep pace with demand, averages should remain relatively low and drivers should continue to benefit from comparative savings at the pump.”

Normally, gasoline prices rise over the early spring because refineries are both performing annual maintenance and switching over to production of summer blend fuel. Both tasks tend to reduce output and put a crimp in supply. In a normal year, prices start to slowly fall after Memorial Day.

Unusual and hopeful sign

The fact that prices have already started to moderate is unusual and may be a hopeful sign for consumers, especially since demand for gasoline has been increasing. It suggests that, even with a significant uptick in gasoline demand during the summer months, it should not result in price spikes, as long as refineries keep operating at near capacity. So far, AAA says that appears to be happening.

“According to the latest data from the U.S. EIA, total U.S. gasoline supplies are at their highest levels to start May on record,” the AAA report said.

With low gasoline prices, AAA said it expects drivers to take to the road this summer in record numbers. It compares the outlook for this summer to the summer of 2007, just before the Great Recession, when demand for motor fuel hit an all time high.

What happened next, however, was not pleasant. Oil prices – along with gasoline prices – rose sharply over the winter of 2008. In July, the national average gasoline price was over $4 a gallon and oil was selling at $122 a barrel.

With gasoline prices leveling off after climbing over the late winter and early spring – and supplies getting even larger – look for more crowded highways ...

Gas prices may be leveling off as Memorial Day approaches

The U.S. has a lot more oil and gasoline on hand than it usually does this time of year

Gasoline prices are still cheaper than consumers have paid in recent years, but they have been rising sharply over the early spring, along with rising oil prices.

In recent days, however, prices at the pump appear to have leveled off. The national average price of self-serve regular is $2.20 a gallon, according to the AAA Fuel Gauge Survey.

That's down slightly from the day before, and about a penny less than the national average a week ago. In previous weeks, the price at the pump had been rising three or four cents every seven days.

Motorists in the Midwest have seen some of the sharpest price declines in the last week. Seven days ago the Ohio statewide average was $2.29 a gallon. Today. it's $2.16.

In Michigan, the statewide average has fallen from $2.30 a gallon to $2.20 in the last week. In Indiana, the statewide average is down 13 cents a gallon in the last week.

Refinery output increasing

While oil prices have risen in recent weeks, prices are still well below recent historical norms. Supplies are ample and there is no indication that's going to change anytime soon. More important to regions like the Midwest, refineries are turning out gasoline at increased capacity, with no breakdowns or accidents that have reduced output periodically, resulting in price spikes.

Here's why that isn't like to change soon. Last week's report from the Energy Information Administration showed the U.S. supplies of both crude oil and refined gasoline are getting bigger.

While it hasn't had a huge effect on oil prices, mainly because of the Canadian wildfires threatening the Alberta oil fields, it's had a softening effect on the price of gasoline. The government energy report showed U.S. gasoline supplies increased by 500,000 barrels, adding to an already generous inventory, in the upper range of the average over the last five years.

A top for oil?

As for oil, a lot of hedge funds are betting its price breaks $50 a barrel, but that price might prove elusive for a while. The Canadian fires should not impact U.S. oil supplies since the U.S. doesn't get a lot of its oil from those particular oil fields.

The firing of the Saudi Arabian oil minister over the weekend, and his replacement with an official firmly committed to the Saudi policy of lower prices, is another sign that oil prices could head lower in the short run.

Iran and Saudi Arabia agree on very little, but both countries seem to be in agreement that OPEC should not curtail production. All that oil has to go somewhere, and will likely depress prices, not raise them.

Gasoline prices are still cheaper than consumers have paid in recent years, but they have been rising sharply over the early spring, along with rising oil ...

Gasoline prices hit six month high

More expensive oil and refinery issues responsible for price hike

Thanks to rising oil prices and seasonal refinery slowdowns, the price of gasoline continues to steadily rise. It's now at a six month high, according to AAA.

Today's national average of $2.22 a gallon might seem high, compared to last month when it was $2.05. But compared to a year ago, when the pump price averaged $2.60 a gallon, it's still a bargain.

Will it stay that way? The next few weeks could be telling.

AAA says there are ample gasoline stockpiles and, despite its recent rise, oil is still selling below $50 a barrel. So AAA does not foresee a dramatic gasoline price increase that would catch consumers off guard.

North of $2 for 40 days

That said, the average price of self-serve regular has remained north of $2 a gallon for 40 straight days. Today's increase, though slight, caps an eight cent rise over the last seven days.

The oil price component of the recent rise in gas prices may have run its course, however. There are very few forecasts of oil advancing beyond the $50 a barrel mark anytime soon. In fact, some analysts have boldly predicted that oil prices will drop sharply again.

Part of the reason for that prediction emerged over the weekend, when it was revealed that OPEC producers are pumping more oil than ever, adding to the world supply. Russia has also increased its production.

That news comes on the heels of last week's report that U.S. oil stockpiles at Cushing, Okla., are also sharply higher.

Oil prices won't be a problem

If consumers continue to get hit with rising gasoline prices, oil prices should not be to blame. Even in the face of sharply rising demand, refineries should be able to get all the oil they need at relatively low prices.

Instead, if consumers face rising, rather than falling, gasoline prices over the summer and into the fall, it will almost certainly be tied to refinery issues. Regional bottlenecks, due to accidents or breakdowns, could result in price spikes here and there.

California remains the most expensive place to fill-up this week. The AAA Fuel Gauge Survey shows the statewide average is $2.80 a gallon, up another three cents in the last week. Hawaii, almost always the most expensive state for gasoline in the past, is seeing gas at the relative bargain price of $2.58 a gallon.

Oklahoma, meanwhile, is still enjoying a statewide average below the $2 a gallon mark – at $1.96. Three other states – Missouri, Texas and Kansas, are also below the $2 a gallon average.

Thanks to rising oil prices and seasonal refinery slowdowns, the price of gasoline continues to steadily rise. It's now at a six month high, according to A...

Why it's really hard to gauge where oil prices are going

It's not just supply and demand -- financial markets are also playing a big role

Motorists have been enjoying reasonably-priced gasoline for over a year now and probably don't care about, or pay much attention to, the daily fluctuations in the price of oil.

But that price, and whether its long-term trend is up or down, will have a lot to do with whether a fill-up becomes a painful experience once again.

Lately, oil prices have been moving higher, well off their recent lows but a far cry from the $100 a barrel producers routinely got just a couple of years ago. After bottoming at around $27 per barrel, oil is now back above $40, even though there is plenty of oil to turn into motor fuel.

But why would the price of oil go up when, from all indications, there is more supply than refiners know what to do with? Because the oil futures market is setting the price, and investors have been betting lately that two things will happen in the future – demand will increase and producers will pump less oil.

Betting on oil

If that happens, the supply and demand ratio will be more in balance and oil will sell for a higher price. Since markets are future oriented, big money is pouring into oil-related investments ahead of time, betting those assets will quickly rise in price.

But the movement of that money, and the momentum it carries, can be a self-fulfilling prophecy. More traders buying oil futures will bid up the price. As the price rises, more investors become convinced that the price will rise even more, so more money chases oil, resulting in still higher prices.

In 2008 oil traders bid the price of oil to over $120 a barrel, only to see it crash a few months later during the financial crisis. Unfortunately, consumers who need gasoline are whipsawed by this kind of market price action.

Reality intrudes

While the momentum on Wall Street appears to be building – and make no mistake, Wall Street wants higher priced oil – reality seems ready to intrude. The Wall Street Journal reported Monday that a proprietary industry report shows oil stockpiles at the main U.S. terminal at Cushing, Okla., is growing, not shrinking as many believed. That caused an immediate drop in oil prices.

But consumers in many parts of the country are seeing sharp increases at the gas pump, largely because the gasoline market has been following oil prices higher. The AAA Fuel Gauge Survey shows the national average price of self-serve regular is up just three cents a gallon in the last week.

But the statewide average is up six cents a gallon in Illinois and nine cents a gallon in neighboring Indiana.

What's clear, however, is that the world has plenty of oil at the moment to meet its needs. How much, exactly, is hard to know because there are so many different sources and not all are transparent.

Gasoline prices are still low by recent standards but remain hostage to a turbulent oil market. Supply and demand should keep them that way for some time to come, but there are plenty of market forces that will do their best to keep them going higher.

Motorists have been enjoying reasonably-priced gasoline for over a year now and probably don't care about, or pay much attention to, the daily fluctuations...

Weekend meeting stops oil price rise

Major oil producers can't agree to slow production

Oil producers meeting over the weekend in Doha failed to reach an agreement to freeze production, in an effort to draw down supplies and raise prices.

As a result, the price of oil dropped Monday and may begin a long retreat. The net result for consumers is that gasoline prices, which always rise in late winter and early spring, might begin falling sooner than usual.

The AAA Fuel Gauge Survey shows that the national average price of self-serve regular today is $2.11 a gallon, up seven cents in the last week and up 15 cents from a month ago.

The average price of diesel fuel is also $2.11 a gallon, its first parity with gasoline in recent memory.

Fuel prices have risen over the last few weeks because of refinery issues, which normally trump oil prices at this time of year. As refineries return to full capacity, the price of oil generally exerts more influence over the price of gasoline and diesel fuel.

Oil's recent rise

Oil prices have been rising in recent weeks as oil producers reportedly plotted ways to reduce the amount of oil on the market. Sunday's meeting in Doha was believed by some insiders to produce an agreement to unify the market in an effort to push the price of oil back over $50 a barrel.

While consumers generally love low oil prices, the financial world was hoping for an agreement that would raise oil prices. The price of oil is so low that only a few producers – primarily Saudi Arabia – can be marginally profitable at these levels.

The stock market has recently moved in lockstep with the oil market, mainly because higher oil means more profitable banks, that have lent billions of dollars to oil companies. Lower oil is seen as bad for economic growth, both in the U.S. and around the world.

No reason to go up

The Wall Street Journal reported Monday that there is little reason for oil prices to move higher in the short run. It notes that the recently lifted sanctions against Iran allow that country to begin selling oil again, adding to a world-wide glut.

That glut began to build in mid-2014, when Saudi Arabia stepped up production of oil, in an effort to drop the price and drive out competition, mainly from U.S. shale producers. So far, it appears to be working, as U.S. rig counts have dropped sharply this year.

Motorists have benefited through lower prices at the pump, but it has come at a steep cost. The economies of U.S. oil producing regions are in a recession, with rising unemployment.

Oil producers meeting over the weekend in Doha failed to reach an agreement to freeze production, in an effort to draw down supplies and raise prices.A...

Gas prices rising but diesel fuel falling

The gap between the two motor fuels is narrowing for the first time in years

For years, no matter how expensive gasoline got, you could be sure diesel fuel cost more. Usually a lot more.

While drivers of diesel powered vehicles got great fuel economy, they paid a lot more per gallon. Lately, these drivers have enjoyed the same savings as their gasoline-driving counterparts.

The national average price of self-serve regular gasoline is $2.05 a gallon, according to the AAA Fuel Gauge Survey. The national average price of diesel fuel is $2.09 a gallon.

Just a year ago, gasoline averaged $2.39 while a gallon of diesel fuel went for $2.79.

Refinery issues

One reasons for the narrowing gap between the gas and diesel pumps is gasoline prices have been rising in recent weeks, due to seasonal refinery maintenance and the switch over to summer blend gasoline.

Gas prices are up 16 cents a gallon nationwide in the last month. The average diesel price has risen just six cents a gallon. While diesel production is affected by refinery maintenance, just as gasoline is, there is no summer blend to raise the cost.

In some good news for motorists, the national average price of gasoline leveled off in the last week and is about the same price it was seven days ago. However, there remains some price volatility in local areas.

Down in Missouri, up in Ohio

For example, the AAA survey shows the average gasoline price dropped six cents a gallon in Missouri over the past week. The price is up four cents a gallon in Ohio during the same period.

According to AAA's calculations, the national average gasoline price has been above $2 a gallon for 20 straight days, with prices at the pump expected to continue to show some volatility as the supply of summer-grade gas is distributed.

On the plus side, refineries have stepped up their capacity, resulting in an increase in gasoline inventories. If not exported, that excess supply may continue to dampen gasoline prices.

The ExxonMobil Torrance, Calif. refinery has restarted, alleviating chronic supply shortages on the West Coast. Barring any major disruptions or shortages in supply, AAA said it expects pump prices to be fairly steady in the coming weeks.  

For years, no matter how expensive gasoline got, you could be sure diesel fuel cost more. Usually a lot more.While drivers of diesel powered vehicles g...

First quarter gas prices lowest in 12 years

But what do the next three months hold?

When it comes to gasoline prices, consumers generally ask, “what have you done for me lately?” It's fine that fuel prices these last three months have been the lowest in 12 years.

But what about the next three months?

According to AAA, consumers have pocketed nearly $10 billion in gasoline savings in the first quarter of 2016, compared to the same period last year. And if you'll recall, gasoline prices were relatively low then.

The next three months should see a steady rise in prices at the pump, but AAA says it shouldn't be anything that will overly stress motorists. It says prices may go up another 25 cents a gallon by Memorial Day, when traditionally prices start to go down again.

But the good news for consumers is the huge oil stockpile the U.S. is currently sitting on. The Department of Energy reported this week that U.S. oil supplies are the largest in 80 years. That suggests plenty of gasoline, as long as the nation's refineries work near capacity.

Refinery runs surging

Analysis by Platts shows refineries are staying busy, with refinery runs surging above 16 million barrels a day. So the outlook for motorists over the next three months, despite the seasonal rise in fuel prices, is pretty good.

Oil prices have rallied off their recent lows and hit $40 a barrel. However, there is no shortage of analysts who think prices will have trouble maintaining that level, as long as supply continues to build and the economy grows only modestly, if at all.

Today, AAA says some 59% of U.S. gas stations are selling gas for less than $2 per gallon. The most common price across the country is $1.999 per gallon. On average, consumers are paying about 36 cents per gallon less than a year ago.

Gasoline prices began their decline in late 2014, and since then consumers have rediscovered the open road. According to AAA, Americans drove 3.1 trillion miles last year – an all time record. The government estimates gasoline consumption is up 5% over a year ago, with hardly any effect on gasoline prices.

When it comes to gasoline prices, consumers generally ask, “what have you done for me lately?” It's fine that fuel prices these last three months have been...

Average gasoline price creeping back toward $2 a gallon

But prices are still much lower than they were at this time last year

Motorists nationwide may have noticed gasoline prices are rising faster in some areas than others. Two things are responsible.

The price of oil has rallied from a low of about $27 a barrel in January to around $37 a barrel this month. Still, a far cry from the time not long ago when oil routinely sold for well over $100 a barrel.

The second factor is the switch over to summer blend gasoline at the nation's refineries. Summer blends cost more, and since production just began, supplies are limited. Each year, fuel prices begin rising in late winter into early spring, only to begin to fall again around July 4.

Getting close to $2

The national average price of gasoline, according to the AAA Fuel Gauge Survey, is $1.93 a gallon. While that's still relatively cheap compared to recent averages of $3 or more, the sudden rise may be taking some consumers by surprise.

The national average price has jumped 11 cents a gallon in the last seven days. It's up about 22 cents a gallon from a month ago. But to keep things in perspective, it's down about 52 cents a gallon from last March.

Consumers in some states are feeling more pain than in others. The statewide average price of gasoline is back over $2 a gallon in Alaska, California, Washington, DC, Hawaii, Iowa, Illinois, Nebraska, Nevada, New York, Oregon, and Washington.

In California, gasoline prices have jumped 13 cents a gallon in the last seven days. They've risen 17 cents a gallon in the last week in Illinois.

In a tweet, Gasbuddy senior petroleum analyst Patrick DeHaan notes that 99.4% of the nation's gas stations are selling regular for more than $1.50 a gallon. A month ago, only 68.8% of stations were. Today's most common fuel price, he says, is $1.99 a gallon.

Biggest price move of the year

AAA says the recent move in prices at the pump is the largest in any seven day period so far this year. The auto club says this year's seasonal rise in fuel prices, due to refinery issues, started later than usual so the increase – while occurring quickly – hasn't been as high as in the last couple of years.

Because of that, AAA says some refineries have reduced capacity at a faster clip in order to draw down abundant supplies of fuel.

AAA says the still-low price of crude oil and generous supplies should keep gas prices from escalating too much as we head into the summer months.

Motorists nationwide may have noticed gasoline prices are rising faster in some areas than others. Two things are responsible.The price of oil has rall...

Oil prices are rising. Here's what it could mean at the pump

More analysts think oil prices could hit $50 a barrel by the end of the year

For weeks now, the chatter in the oil industry has been that OPEC would finally get its act together and agree to limit production. That, the reasoning went, would boost oil prices.

While the oil glut is still a reality, oil prices have been rising over the last couple of weeks, hitting a three month high in Monday's trading. On the futures market, Brent crude broke $40 for the first time in months. West Texas crude was not far behind.

There is still a fierce debate over whether oil has bottomed, or if this rally is just a head fake, with lower prices still to come. However, more and more analysts are saying prices could top out at $50 a barrel by the end of the year.

On one hand, $50 a barrel oil would be helpful to the U.S. economy and very helpful to people who live in Texas, Oklahoma, Wyoming, and North Dakota. Those states' economies have been crushed by the collapse in oil prices.

Boost in gasoline prices

But what about consumers who have been enjoying cheap gasoline for a year and a half? Patrick DeHaan, senior petroleum analyst at GasBuddy, tells ConsumerAffairs that consumers would definitely see higher prices at the pump, but nothing like 2010 to 2014.

“I’d say $50 oil during the summer could potentially equate to a national average gas price of $2.40 a gallon, while during the winter, it’d mean $2.20 to $2.30,” DeHaan said.

In other words, $50 a barrel for oil might be a sweet spot, allowing the U.S. oil industry to recover but not causing undue pain to consumers.

Of course, it's still an open question as to whether oil prices can climb back to $50, or how soon that would happen.

Reuters reports oil stockpiles increased by 670,000 barrels last week at Cushing, Okla., where reserves now total almost 69 million barrels.

For weeks now, the chatter in the oil industry has been that OPEC would finally get its act together and agree to limit production. That, the reasoning wen...

Gasoline prices on the rise

A California reader wonders why diesel prices are also going up

Gasoline prices are rising a bit nationwide, but it has less to do with a stabilizing price of oil than annual refinery maintenance, which reduces output and normally raises prices.

According to AAA, the national average price of gasoline is $1.75 a gallon, up five cents a gallon from a week ago. The increase is more dramatic in California, where Gasbuddy reports the average price of gasoline has risen 10 cents a gallon in the last week.

A reader, Robert from Oceanside, Calif., reported that diesel fuel in his area is also going up, and wonders why.

Why is diesel going up?

“Why does it seem that diesel prices seem to rise when the California summer blends are mandated and the price of gasoline rises?” he wrote in an email to ConsumerAffairs. “To my knowledge there is no summer blend for diesel. This seems like a rip off to me. Can you explain?”

Patrick DeHaan, senior petroleum analysts at Gasbuddy, said his numbers show the statewide price of diesel in California has actually gone down a penny a gallon, but says its possible prices have risen in some areas.

“Some stations may have raised diesel prices as crude oil prices have risen, prompting not only gasoline to rise, but other refined fuels, such as jet fuel and diesel,” DeHaan told ConsumerAffairs. “Keeping in mind all refined products are impacted when a refinery does maintenance as well – not just gasoline production – so diesel could rise due to refinery maintenance season.”

Agriculture demand

California is a big agricultural state and producers use a lot more diesel fuel starting in the spring. DeHaan says as agricultural consumption rises in the spring, demand goes up and so does the price. But there is some good news on the horizon.

“Usually diesel’s peak price is during winter and is lower during summer,” DeHaan said. “I expect that to be the case this summer as well.”

After the price of crude oil, refinery operations have the biggest impact on gasoline prices. Last summer, while much of the rest of the nation continued to enjoy falling fuel prices, consumers in the Midwest saw pump prices escalate because of issues at a BP refinery that sharply curtailed the delivery of fuel to several states.

Gasoline prices are rising a bit nationwide, but it has less to do with a stabilizing price of oil than annual refinery maintenance, which reduces output a...

Southern California drivers to see sharply higher gas prices

In the rest of the country, the gasoline price decline appears to have stalled

It took a long time for California gasoline prices to finally start falling, joining much of the rest of the country. But those prices are headed higher again, as early as next week.

Refiners have been stuck with excess supplies of the cheaper, winter grade gasoline that cannot be legally sold after next Tuesday. To get rid of it, wholesalers have slashed prices in recent weeks.

That's led to an average statewide price at the pump of $2.34 cents a gallon in California, more expensive than the national average but down nearly 80 cents a gallon from this time last year.

20 to 35 cent rise

“Now that the winter gasoline has been consumed, those big discounts have vaporized, leading it to appear to be a big hike in price,” Gasbuddy senior petroleum analyst Patrick DeHaan said in an email to ConsumerAffairs. “I expect prices there to rise 20 to 35 cents a gallon over the next week as stations resupply with the more expensive, or less discounted, fuel.”

DeHaan says this transition occurs every year around this time and is the reason behind the seasonal lift in prices at the pump.

“As the summer fuel season starts, inventories are generally limited – they build over time – and that means going from a glut of cheap winter gasoline to tight supply of CARB-mandated summer spec fuel,” DeHaan said.

DeHaan predicts Northern California will see a similar rise in three to four weeks. He says the price hike may come in at a lesser or greater degree, depending on refinery maintenance, supply, demand, and other factors that can affect price.

“The rest of the country will also see a lift in gasoline prices over the next two to three months before prices peak in May or June just ahead of the deadline for the transition to be completed,” DeHaan said.

Price decline stalls

The national average price of gasoline, which had been steadily falling for months, appears to have stalled for now. According to the AAA Fuel Gauge Survey, the national average price of self-serve regular is $1.728, a fraction of a cent higher than a week ago.

The survey shows consumers in the vast majority of states are still paying average prices below $2 per gallon. Missouri and Oklahoma remain the cheapest in the nation, at $1.46. On the other end of the spectrum, motorists in the West are paying some of the nation’s highest averages led by Hawaii at $2.57 and California.

Prices are also moving in different directions in different parts of the country. Weekly comparisons show prices are down in 30 states and Washington, D.C. on the week with the largest savings west of the Rockies. At the same time, drivers in 20 states have seen prices at the pump go up since last week.

It took a long time for California gasoline prices to finally start falling, joining much of the rest of the country. But those prices are headed higher ag...

Falling gas prices still putting money in consumers' pockets

U.S. has largest oil supply for this time of year in nearly 80 years

Retail gasoline prices continue to fall across the U.S., hitting levels even the experts believed would never be seen again.

The national average price of self-serve regular is around $1.72 a gallon, according to the AAA Fuel Gauge Survey. A year ago, the average price was $2.17 a gallon.

Motorists can thank oil prices, which continue to fall in the face of an increasing supply glut. AAA reports the U.S. is swimming in oil, with crude oil inventories at their highest level for this time of year in nearly eight decades.

Barring any major disruptions in supply, AAA predicts gas prices will remain near their lowest price point since the Great Recession, at least for the next couple of weeks. Once refineries begin to curtail operations for seasonal maintenance, oil prices will be less of a factor and gasoline prices should rise a bit.

The end of the decline?

Also, gasoline demand usually starts to increase in February, reaching its peak in August.

The combination of increased demand and reduced supply often leads to upward swings in the price at the pump. Still, with prices so low and oil prices headed down instead of up, increases at the pump should be fairly painless.

For years, the national average gasoline price has disguised the fact that gas was cheap in some parts of the country and really expensive in other parts. AAA says prices are now more even than they've been in years, with the southeast and southwest still enjoying the lowest prices but the Pacific northwest not outrageously expensive.

According to AAA, drivers in 44 states continue to pay gas prices below $2 per gallon. Oklahoma pays the least at $1.42 a gallon. Hawaii pays the most at $2.63 a gallon.

In addition, prices at the pump are moving in the right direction, as far as drivers are concerned. Gasoline prices are down in nearly every state week-over-week and consumers in 20 states are saving a nickel or more per gallon at the pump.

The biggest price drops in the last week came in the Midwest. Drivers in Ohio and Indiana saw their price drop 14 cents a gallon. Michigan motorists are saving 13 cents a gallon.

Retail gasoline prices continue to fall across the U.S., hitting levels even the experts believed would never be seen again.The national average price ...

Economists worry cheap oil is hurting the economy

Since when are high prices a good thing?

You, as a consumer, no doubt think cheap oil is great. It has reduced the price of gasoline to levels not seen in nearly a decade.

But perhaps nothing so perfectly illustrates the gulf between the interests of Wall Street and Main Street as falling oil prices, because Wall Street definitely doesn't see it the way you do.

In recent weeks, stock prices have moved in tandem with oil prices. Oil prices plunge, so does the stock market. Oil prices rally and stocks surge.

Bloomberg News does an excellent job of explaining why Wall Street has such a different view of oil prices, and it boils down to this: too many institutions made big bets that oil prices would keep going higher. You could say they bet the bank on it.

Shale producers had to borrow a lot of money to fund their operations. That debt paid high interest rates and was eagerly purchased on Wall Street. Sound familiar?

Remember the housing bust?

A similar thing happened during the early 2000s housing boom, when subprime mortgages in particular were prized for their high interest rates. At the time, very few people thought home prices could actually go down. But they did.

In 2008 bad mortgage bets nearly sank the economy. Today's nervousness is due in part to the fear that bad oil bets pose their own systemic risk. So when oil prices get so low that U.S. producers can't be profitable, the people who have bought their debt get very nervous.

Making matters worse, in Wall Street's eyes, consumers are saving lots of money at the gas pump but aren't spending it. Instead, they're saving it for heaven's sake, or paying off their credit cards. So the complaint is that consumers are benefiting from low oil prices but aren't “sharing the wealth,” so to speak.

Economists rightly point out that this can be a problem. Since the Great Recession, the one area where the U.S. economy has enjoyed strong growth has been in the oil industry. Now that industry appears to be going down for the count, and with it the huge contributions it has made to the nation's economy.

It was hoped that the extra money flowing to consumers through lower gas prices would get spent elsewhere, providing a lift to the economy. That isn't happening, so the net effect is the slowdown in the oil industry has produced a drag on the overall economy.

Weak growth

But instead of blaming consumers for socking away the money they are saving at the gas pump, perhaps economists might better explain why the U.S. economy, absent the recent contribution from the oil industry, is so weak. Why haven't other sectors recovered? And why is it up to consumers to take up the slack?

Maybe one of the reasons Wall Street has been so volatile this month is the realization that there doesn't seem to be much there to backstop the economy when the oil industry isn't providing the economic growth it has over the last few years.

Was it always this way? Definitely not. But in the first quarters of the last two years, the U.S. economy has contracted. Will it be the same this year?

If so, there may be a lot of blame to go around. But it may not be fair to blame American consumers who have finally caught a break in the form of lower gas prices.

You, as a consumer, no doubt think cheap oil is great. It has reduced the price of gasoline to levels not seen in nearly a decade.But perhaps nothing s...

For better or worse, oil is running the economy

It's great for consumers but is making markets extremely nervous

Oil is a lubricant that usually keeps machines running smoothly. Lately, however, it has held an oversized influence over all things economic – and the results have been far from smooth.

When oil prices fell below $30 a barrel last week, world stock markets nearly panicked. While cheap oil is normally seen as a good thing, investors are worried the low price will drive many oil companies out of business, leaving the banks that have made big loans to them high and dry.

Added to those worries has been the impact on the U.S. economy. Over the last five years the U.S. shale oil industry has been a major economic driver, pulling the rest of the economy along with it. Now it's posing a drag and some are even concerned the economy could slide into a recession.

Tom O'Grady, CEO of Pro Teck Valuation Services, says the negative impact low oil prices is having on some real estate markets is alarming. He says the company's latest Home Value Forecast shows six of the bottom 10 real estate markets are located in Texas: namely Abilene, El Paso, Houston, Killeen, McAllen, and Midland.

That's why the outlook for oil prices captures the attention of both economists and investors. Some of the stock market's volatility lately can be traced to rising and falling oil prices.

Back up again

This week, oil is back up again, rising Tuesday to around $31 a barrel. Reuters attributes the slight rebound to hopes that oil producers are about to come to some kind of agreement that would turn down the oil spigot and reduce the current supply glut.

How likely is that to happen? Not very, according to The Wall Street Journal, which reports “there are few signs the market will balance itself soon.”

The silver lining for consumers – those who don't work in the oil patch – is low gasoline prices. AAA reported this week that gas prices have spent 26 consecutive days below $2 per gallon and could go lower still.

Only 11 states pay more than $2 a gallon

As it is, the national average price of $1.82 a gallon is the cheapest price since January 2009. Only in 11 states and the District of Columbia is the average gasoline price higher than $2 a gallon.

California prices are the nation's highest, at $2.67 a gallon. But AAA says a resolution of a lingering refinery issue there has started to bring the price down.

At the other end of the scale, consumers in Oklahoma are paying an average of $1.53, and in Missouri the average price is $1.54.

Oil is a lubricant that usually keeps machines running smoothly. Lately, however, it has held an oversized influence over all things economic – and the res...

Gas prices almost certain to go much lower

Plunging oil prices not expected to go back up anytime soon

Consumers have enjoyed falling gasoline prices for more than a year now, but no doubt there is always that nagging voice in the back on their minds whispering, “better enjoy this while you can, it won't last.”

Well, the nagging voice may have been wrong. The continued decline in oil prices, which gained momentum this week, most likely means the current national average price, $1.86 a gallon, will go down more. Maybe a lot more.

AAA reported this week that depressed world oil prices, now around $26 a barrel, have sent gasoline prices to their lowest level since February 2009. The average price of self-serve regular has gone down 63 out of 73 days.

But some of the sharpest declines in world oil prices have come in the last few days, as sanctions against Iran disappeared and that country is now free to start selling its oil in an already saturated market.

Effects have yet to show up

On Wednesday, Gas Buddy senior petroleum analyst Patrick DeHaan Tweeted, “Keep in mind what we're watching- plunging oil prices- takes 1-2 weeks to fully be realized at your local gas station.”

That suggests the price of gasoline will keep going down – maybe significantly – for a few more weeks until U.S. refineries begin their annual seasonal maintenance, which usually creates supply bottlenecks, driving prices up again, at least temporarily.

DeHaan also points out that the current price of oil, adjusted for inflation, is even cheaper than it averaged during the 1950s.

AAA reports the price of crude oil has dropped more than 70% from its June 2014 high of $107.26 per barrel. When oil prices plunged last week, breaking through the $30 a barrel mark, it was the first time that had happened since 2003.

Revising its forecast

All of this has caused AAA to recalculate its previous estimate of 2016 gasoline prices at between $2.25 and $2.45 a gallon. That seems downright expensive at this point.

But the lesson here is that when it comes to oil, nothing is permanent. Today's assumptions about supply and price can be turned around by tomorrow's event.

After all, it wasn't too long ago that many believed the world was fast approaching the time when it could not produce enough oil to meet demand. They warned of shortages and sky-high prices.

The theory failed to foresee the shale oil revolution and the huge efficiencies in cars that has slowed the growth in demand.

Things can change. So it might be wise not to completely tune out nagging voice in the back of your head.

Consumers have enjoyed falling gasoline prices for more than a year now, but no doubt there is always that nagging voice in the back on their minds whisper...

Gas war in Michigan drops price to 47 cents a gallon

Motorists in small resort town reliving the good old days

Residents of Houghton Lake, Mich., no doubt rubbed their eyes when they passed the B&B; gas station on their way to work. The posted price was lower than it was in 1973.

Patrick DeHaan, senior petroleum analyst at Gas Buddy, reports an old-fashioned price was has broken out in the northern Michigan resort town. DeHaan Tweeted a picture showing the posted price at 47 cents a gallon.

Earlier, it had been at 78 cents a gallon, making national news in the process. Apparently, however, that wasn't low enough.

Stations losing money

Wholesale gasoline prices are cheap, but not that cheap. The warring stations are obviously losing money, just like Saudi Arabia, which launched an oil price war more than a year ago in order to damage U.S. shale producers and gain market share.

According to AAA's Fuel Gauge Survey, the national average price of gasoline is $1.89 a gallon. In Michigan, the statewide average is $1.72 gallon.

Cheap gasoline is relatively new to Michigan. While most of the country was enjoying low fuel prices back in August, motorists in Michigan were paying $3 a gallon and more because of problems at a BP refinery that supplies much of the Midwest with gasoline.

Gas wars were once fairly common, but that was in the long ago era of cheap gasoline. They were usually short-lived affairs, designed to get attention -- as this one appears to have done.

Residents of Houghton Lake, Mich., no doubt rubbed their eyes when they passed the B&B gas station on their way to work. The posted price was lower than it...

Oil prices drop below $30 a barrel

But the bonanza for consumers may only last a few more weeks

The world price of oil broke below a critical price barrier Friday, selling for the lowest price since before the financial crisis of 2008.

Both Brent and WTI crude sold for $29 and change on London's ICE Futures exchange, according to The Wall Street Journal.

Oil sold off ahead of the lifting of sanctions on Iran. That move is expected to send millions of barrels of new supply into an already glutted world oil market.

Uncertainty over the reasons for the glut has rattled Wall Street, where stocks have plunged along with the price of oil. Traders are trying to determine whether the build up in oil is because of supply or demand issues.

Supply or demand is critical

If it's supply – the world is simply pumping more oil than anyone needs – that's one thing. And it would actually be fairly good news, since industries outside of the oil sector are benefiting from lower energy prices.

However, if it's a demand issue – that the world simply doesn't need as much oil as before – that would be taken as a bad sign. It would suggest an economic slowdown and possible global recession. That's what has the market spooked.

There's no doubt, however, that low oil prices are good for consumers, especially motorists. The national average price of gasoline has been below $2 a gallon since before the end of last year, and oil prices have been a major contributor.

How long will it last?

But Patrick DeHaan, senior analyst at GasBuddy, says there's a limit to how much oil's decline will help. DeHaan says there is about a four to six week window in which consumers can generally expect gas prices to continue declining, along with oil.

“But towards the end of that window, refinery maintenance season begins and the phase in of seasonal blends of gasoline start,” DeHaan told ConsumerAffairs. “That will bring with it higher gasoline prices.”

How much higher? DeHaan says the average run-up in gas prices during the spring the last five years is 35 to 75 cents per gallon. Motorists on the West Coast could get it much worse, he says, unless ExxonMobil’s Torrance refinery is fully repaired soon.

“Some hot spots could be seen in the Midwest briefly, but overall this summer should feature lower prices than last summer,” he said.

DeHaan also points out that the price of a barrel of oil is now three times cheaper than the steel barrel used to contain it.

The world price of oil broke below a critical price barrier Friday, selling for the lowest price since before the financial crisis of 2008.Both Brent a...

Will 2015's bargain at the gas pump continue?

It all depends on whether the world oil glut continues, and AAA predicts it will

Motorists should continue to enjoy low gasoline prices in 2016, but it remains to be seem if prices will come close to 2015's bargain levels.

According to AAA, 2015's average price at the pump was the second lowest in a decade. Only 2009 was lower.

The price for the year averaged out to $2.40 a gallon. It ended the year much cheaper, right at $2 a gallon.

Fuel facts

AAA has singled out some fuel facts that should bring a smile to consumers' faces:

  • The national average price of gas for December was $2.01 per gallon, which was the lowest monthly average since March 2009.
  • About 71% of U.S. stations are selling gas for less than $2 per gallon, and drivers can find at least one station selling gas for less than $2 in 47 states.
  • More than 16,000 stations across the country are selling gas for less than $1.75 per gallon.
  • Gas prices in 2015 averaged about 94 cents per gallon less than 2014.
  • Americans saved more than $115 billion on gasoline this year compared to 2014, which was an average of more than $550 per licensed driver.

Can the good times continue?

The real question, of course, is what will prices do in 2016? It depends a lot on where the price of oil goes. Some analysts think the price could fall below $30 a barrel. Others think it could rebound in the second half of the year.

AAA thinks the price is going lower, with the annual average price of gas in 2016 between $2.25 and $2.45 per gallon.

Consumers should be prepared for a slow rise in prices at the pump, regardless of the price of oil. In late winter and early spring, refineries traditionally reduce operations for maintenance and switch over to summer blends of gasoline. Summer blends cost more and the decrease in production will tighten supplies, sending the wholesale price higher.

Highs and lows

Consumers in the southeast are paying the least for gasoline. Motorists in the west are paying the most.

The five states with the lowest average prices include: Missouri ($1.72), Oklahoma ($1.75), South Carolina ($1.75), Arkansas ($1.75), and Tennessee ($1.76).

The five states with the highest prices include: California ($2.85), Hawaii ($2.69), Nevada ($2.51), Washington ($2.47), and Alaska ($2.47).

For the year, South Carolina’s annual average price of gas was the cheapest in the country for the fourth year in a row, at $2.10 per gallon. It was also was the lowest annual average for the state since 2004. Drivers in South Carolina paid about $1 less during the year than in 2014.

Motorists should continue to enjoy low gasoline prices in 2016, but it remains to be seem if prices will come close to 2015's bargain levels.According ...

U.S. poised to lift ban on oil exports

Provision of year-end budget deal would allow U.S. oil to be sold on world market

The government funding bill headed toward President Obama's desk contains a provision that seemed to come out of nowhere – a lifting of the 40-year ban on U.S. oil exports.

Republicans pushed that proposal back in August, but Democrats blocked it. Most seemed to think the issue was dead.

But in end-of-the-year deal making, Democrats traded their acceptance of lifting of the ban for new renewable energy incentives. Of course, not all Democrats were opposed to allowing U.S. oil producers to sell their oil overseas.

In the newly oil-rich state of North Dakota, the state's two senators – Democrat Heidi Heitkamp and Republican John Hoeven, worked together to persuade other lawmakers to go along.

Heitkamp said she has worked for more than a year to repeal the export ban, meeting with members of Congress – especially Senate Democrats – and top White House officials to explain why lifting the ban makes sense.

Tough sell

Heitkamp admittedly had the tougher job, since Republicans were already in favor of lifting the ban. One by one, Heitkamp found members of her party who saw the merits of her point of view.

Hoeven said he has repeatedly called for repealing the ban and worked persistently to get it included in year-end legislation. The senator, who serves on the Energy Committee, is a co-sponsor of bipartisan legislation lifting the ban that passed the committee this summer.

“Lifting the ban on crude oil exports is a triple win – it will create jobs and grow our economy. It will keep the price of gasoline lower at the pump for consumers because of more supply, and it will bolster national security through energy security,” said Hoeven.

He points to studies at the U.S. Energy Information Administration (EIA), the non-partisan Brookings Institute and the Harvard Business School as supporting a resumption of U.S. oil exports, stopped in the 1970s during persistent shortages and rising prices.

Gasoline exports have never been banned

Current law does not block exports of U.S. gasoline, only oil. In the last year, since a price war launched by Saudi Arabia, the growing U.S. oil industry has been stopped in its tracks.

Hoeven says a study by IHS, a global provider of data and analysis, projects that lifting the ban will attract an estimated $750 billion in new investments and create nearly 400,000 additional jobs in the U.S. between 2016 and 2030.

“This deal to lift the 40-year old ban on exporting oil is a huge win for North Dakota and it reinforces the importance of good-faith, bipartisan negotiations and legislating,” said Heitkamp.

What's it mean for consumers?

Consumers worried that a resumption of U.S. oil exports will end the low gasoline prices they currently enjoy might have a point. However, every credible source suggests there is so much oil, both in the U.S. and around the world, and demand is actually leveling off, that supply is likely to outpace demand for the foreseeable future. Exports of U.S. oil will just make the current oil glut larger.

If U.S. refiners are allowed to sell as much gasoline on the world market as they want, and it hasn't raised prices, it might follow that exporting oil currently sitting in storage tanks might not have an impact either.

The government funding bill headed toward President Obama's desk contains a provision that seemed to come out of nowhere – a lifting of the 40-year ban on ...

Falling gasoline prices may contribute to a happy New Year

AAA predicts national average price below $2 a gallon to start 2016

The price motorists pay at the gas pump keeps falling, and with less than five weeks remaining in 2015, it appears likely we'll start 2016 with a national average price below $2 a gallon.

According to the AAA Fuel Gauge Survey, today's national average is $2.03 a gallon, down three cents per gallon for the week, 14 cents over the last month, and 74 cents compared to a year ago.

The national average has dropped for 24 of the past 30 days. The biggest contributor to the break at the gas pump has been the end of unplanned and planned refinery maintenance, which tends to reduce the output of refined gasoline and creates temporary bottlenecks in supply.

AAA says that not only have these supply disruptions been cleared up, demand for gasoline typically goes down during the winter months and the gasoline market may become even more oversupplied in the near term.

That should should keep gas prices relatively low. Barring any unanticipated disruptions in supply, or swings in the price of crude oil, AAA expects retail averages to continue to fall leading into 2016.

Oil experts weigh in

A new survey by CNBC should also give motorists some holiday cheer. The business news network surveyed oil industry analysts and traders and found 46% believe oil will reach new lows in the first half of 2016. In a unanimous vote, 100% of those surveyed agreed that OPEC will not increase production when it meets later this week.

It was OPEC action a year ago, ramping up production in the face of ample supply and declining demand, that began oil's downward price spiral. Low oil prices, of course, pull down gasoline prices with them.

Meanwhile, drivers in 22 states are now enjoying gasoline prices that average $2 a gallon or less. Just a couple of months ago, refinery problems in the Midwest sent gasoline prices in that region soaring. But now AAA reports Michigan is tied with Missouri for the lowest average gasoline price – $1.81 a gallon – and Ohio is close behind at $1.82.

Most areas see falling prices

While prices have leveled off in some areas, average gasoline prices are down in 45 states and Washington, D.C. month-over-month, and consumers in 34 states are saving a nickel or more per gallon.

Fifteen states have seen savings of 25 cents or more per gallon over the last 30 days, led by Michigan, where the price is down 47 cents a gallon. Wisconsin motorists are saving 38 cents a gallon and Ohio drivers are pocketing 36 cents.

Pump prices moved higher in five states over the last month, all by less than a nickel per gallon. The price is up four cents in Oregon, and three cents in both New Jersey and Washington.

The price motorists pay at the gas pump keeps falling, and with less than five weeks remaining in 2015, it appears likely we'll start 2016 with a national ...

AAA: Cheap gasoline will get even cheaper

Auto club predicts national average price below $2 a gallon by Christmas Day

It was just a little more than a year ago when oil prices collapsed, dragging gasoline prices lower as well. While consumers have held their breath, waiting for prices to go back up, they haven't.

And they won't anytime soon, says AAA.

In fact, the auto club reports gasoline prices have fallen for ten consecutive days, reaching a national average price of $2.16 per gallon. And they are likely to go lower still.

By Christmas Day, AAA predicts the national average price of self-serve regular will be below $2 a gallon for the first time since 2009. It's already well below that level in wide areas of the U.S.

The average price of gasoline in South Carolina is $1.91 a gallon. It's $1.92 in Alabama and $1.93 in Texas.

Refinery problems fixed

One reason the national average price is falling so quickly is that prices have begun to decline in the Midwest, more in line with other parts of the country. Midwestern pump prices have been volatile in recent months because of refinery problems that have reduced the flow of product.

AAA says most of those issues have been resolved, including at the ExxonMobil refinery in Joliet, Illinois, which has reportedly concluded its scheduled maintenance and returned to production. This and other refinery restarts in the Midwest have led to large weekly and monthly price discounts in Ohio, Illinois, Indiana and Michigan.

The Western states continue to experience the highest gasoline prices. In addition to Hawaii, the perennial leader in expensive fuel, California has an average gasoline price of $2.80 a gallon, followed by Nevada at $2.67 and Washington at $2.52.

It was just a little more than a year ago when oil prices collapsed, dragging gasoline prices lower as well. While consumers have held their breath, waitin...

Report sees low gasoline prices for years to come

International Energy Agency predicts it will take more than four years for oil to reach $80 a barrel

Consumers are accustomed to having low prices for a while, only to see them suddenly move higher. It's happened with gasoline a number of times in the past.

So when gasoline prices plunged a year ago, most consumers could be forgiven if they believed this break at the gas pump would be short lived. However, it's lasted a year and a new report from the International Energy Agency (IEA) predicts it will last a lot longer.

In its 2015 report, the IEA says the world is awash in a glut of oil that has depressed prices and will keep them low for years to come. In fact, the report predicts it will take until 2020 for the price of oil to climb back to $80 a barrel.

Before last year's plunge, oil was routinely trading at between $90 and $100 a barrel and had been doing so for years.

Effect on gasoline prices

What's that mean for gasoline prices? Barring refinery bottlenecks, fuel prices should remain in their present range. In the last 10 days prices have trended upward but may begin drifting lower between now and the end of the year.

AAA reported last week that stations in 41 states were selling fuel at or below $2 a gallon. Over the last week the national average price of self-serve regular has held close to $2.20 a gallon.

“The fuel savings continue to add up with pump prices in many areas below $2 per gallon,” said Avery Ash, AAA spokesperson. “It looks increasingly likely that drivers will find the cheapest gas prices for the upcoming holidays in at least seven years.”

Warning

While the IEA report is good news for motorists, it is couched in a warning. The main reason oil is so plentiful and so cheap is Saudi Arabia and the Gulf States are waging a price war, hoping to gain market share from U.S. and other producers.

The IEA warns that the world is in danger of becoming over-reliant on a handful of producers, as was the case during the 1970s.

"It would be a grave mistake to index our attention to energy security to changes in the oil price," said IEA Executive Director Fatih Birol. "Now is not the time to relax. Quite the opposite: a period of low oil prices is the moment to reinforce our capacity to deal with future energy security threats."

But even the Saudis' ability to dominate the energy market may be numbered. The IEA finds that renewable energy is fast becoming the leading source of new energy supply world-wide.  

Consumers are accustomed to having low prices for a while, only to see them suddenly move higher. It's happened with gasoline a number of times in the past...

Gasoline prices drift lower for another week

$3 a gallon fuel becoming a distant memory

Motorists in most parts of the country are in for a treat, not trick, when they fill up in late October. Retail gasoline prices have been in decline for nearly two weeks.

The national average price of self-serve regular is $2.21 a gallon, according to AAA's Fuel Gauge Survey. Unless you live in Alaska, Hawaii, or California, you might not remember the last time prices were north of $3.

A year ago, oil prices had just begun their dramatic decline, but gasoline prices had yet to follow suit. The national average price 12 months ago was $3.08 a gallon.

Below $2 a gallon more common

Now, it's getting hard to find prices over $2 a gallon. In a Tweet, GasBuddy.com's Patrick DeHaan said 27% of U.S. gas stations are selling gasoline for less than $2 a gallon.

Gasoline prices continue to drift lower as refineries complete the switch over to winter grade gasoline blends and oil remains plentiful and cheap. And there is little evidence that oil prices will increase anytime soon.

“A number of factors have the potential to shift the global price of crude oil in the weeks ahead,” AAA said in a release this week. “The Iranian nuclear deal is once again front-of-mind, as global negotiators continue to move forward, which could bring Iranian oil back to the market in as little as two months.”

More Iranian oil on the market will only increase the supply glut that has depressed prices over the last year. Added to that, AAA notes that China’s economic growth rate fell below 7% for the first time since 2009, putting a damper on speculations that demand there could offset some of the market’s oversupply.

U.S. swimming in oil

The U.S. also has more oil than it can use. The latest report from the U.S. Energy Information Administration shows crude oil supplies are building. Because of ample supply, oil prices have settled into a trading range well below $50 a barrel.

Refineries and distribution remain the variables most responsible for price disparities from one region to another. The Southeast, for example, continues to enjoy low prices while motorists in the West pay significantly more.

The states with the most expensive gasoline are:

  • Hawaii $2.90
  • California $2.85
  • Nevada $2.78
  • Alaska $2.57
  • Utah $2.47

The states with the cheapest gasoline are:

  • South Carolina $1.91
  • Mississippi $1.94
  • Alabama $1.94
  • New Jersey $1.95
  • Tennessee $1.96
Motorists in most parts of the country are in for a treat, not trick, when they fill up in late October. Retail gasoline prices have been in decline for ne...

Oil prices jump, so what's next for gasoline prices?

Pump prices have stopped falling, but experts think the pause is temporary

Wall Street is getting excited about crude oil again and that's not particularly good news for consumers.

The price of crude oil surged almost 5% in Tuesday's trading, reaching its highest level in more than a month. Data from the Energy Information Administration showed a drop in production. Before that, oil prices had been slowly rising off what now appears to be a bottom, up 27% since August.

Even though it takes a while for oil prices to work their way through the retail gasoline system, motorists have seen a pause in the steady decline of prices at the pump. The AAA Fuel Gauge Survey shows the national average price of self-serve regular has been at around $2.29 a gallon for the last couple of days. That's still a dime cheaper than it was a month ago.

“So far, despite the two-day hit on most spot market gasoline products of a dime plus, we aren’t seeing any large jumps,” Jeffrey Pelton, senior petroleum analyst at GasBuddy, told ConsumerAffairs. “The Midwest saw some activity – up three cents – but more related to unplanned refinery issues that continue to plague the industry rather than the current spike.”

June peak

AAA says retail averages peaked in mid-June and have declined 51 cents per gallon since then. It says the national average tends to move lower during the fall and winter months due to seasonal declines in both driving and gasoline demand, and pump prices have fallen during the month of October for three years in a row.

Even with refineries going offline to conduct scheduled maintenance, AAA says there should still be more than enough gasoline to meet demand because people tend to drive less this time of year. As long as there are no major disruptions to supply, the national average price of gasoline is expected to move lower by the end of the year, and for the first time since 2009, could fall below the $2 per gallon benchmark.

Pelton agrees that there appears to be enough oil and refined gasoline in the pipeline to counter jumps in the price of crude oil, at least in the short run.

Double-digit drops still ahead

“I still feel strongly that once we get out of the October malaise, November will see 10-12 cent drops, with December showing even better numbers 13-15 cent drops,” he said. “It should be a great holiday season for drivers.”

Meanwhile, drivers in every state are paying an average price at the pump below $3 per gallon for the first time since 2009, according to AAA. Averages on the West Coast remain some of the highest in the nation, and California, at $2.94, has unseated Alaska as the nation’s most expensive market for retail gasoline.

Consumers in New Jersey and South Carolina are paying the nation’s lowest averages at the pump, and are among four states with retail averages below $2 per gallon.

Yet from here, a lot depends on the price of oil. Prices have rallied from below $40 per barrel to near $50 per barrel in Wednesday's trading. But it remains to be seen how much higher prices will move in the face of a continuing supply glut.

When motorists were paying close to $4 a gallon, oil sold at around $100 a barrel.

Wall Street is getting excited about crude oil again and that's not particularly good news for consumers.The price of crude oil surged almost 5% in Tue...

Gas in five state averages less than $2 a gallon

But prices remain over $3 a gallon in California and Alaska

It's a measure of how far gasoline prices have fallen in less than a year that fuel at $2.50 a gallon seems a bit high.

The national average, according to AAA's Fuel Gauge Survey, is now $2.28 a gallon, more than a dollar cheaper than at this time last year. Remarkably, the average price has dipped below the $2 a gallon benchmark in five states:

  • South Carolina - $1.90
  • Mississippi - $1.93
  • Alabama - $1.95
  • Tennessee - $1.98
  • Louisana - $1.99

At the same time, it appears as though several other states are poised to join the sub-$2 club. New Jersey, Virginia, Texas, and Arkansas all have average gasoline prices below $2.05 a gallon.

Lowest since 2004

At the other end of the scale, California and Alaska are the only two states to still have average gasoline prices above $3 a gallon. But those are the exception, as most states are enjoying the lowest seasonal gasoline prices since 2004.

AAA says the national average has dropped for 36 consecutive days for a total savings of 38 cents per gallon during that time. The savings at the pump are largely due to the relatively low price of crude oil and abundant petroleum supplies.

It's helped that there have only been a few significant refinery issues in the last few weeks. This, and the end of the summer driving season, has reduced demand somewhat. With no regional supply bottlenecks to speak of, AAA says pump prices are down in 47 states and Washington, D.C. in comparison to one week ago, with the motorists in the majority of these states saving at least a nickel per gallon.

Midwest remains unpredictable

Drivers in six states are benefiting from double-digit savings in the price of retail gasoline, with the largest discounts over this period seen in Alaska, South Dakota, and California. Meanwhile, prices in three Midwestern states have gone up over the last week.

Gas Buddy senior analyst Patrick DeHaan Tweeted that a recent fire at Husky's refinery in Lima, Ohio has sent fuel prices up in Ohio, Indiana, and Michigan.

AAA notes that prices in the Midwest have consistently been among the most volatile in the nation. This week, prices in some of those states are going up while others are going down.

California motorists continue to suffer, in large part, because of a refinery issue. A fire in February at the Exxon Mobile refinery in Torrance, Calif., caused widespread damage that continues to affect output. Even though California fuel prices tend to be among the highest in the nation, they now run about a dollar a gallon more than most states in the southeast, which has an abundance of oil refineries.

It's a measure of how far gasoline prices have fallen in less than a year that fuel at $2.50 a gallon seems a bit high.The national average, according ...

Many gas stations selling fuel at less than $2 a gallon

Statewide average in South Carolina is $1.97

With Labor Day now in the rearview mirror and the summer driving season officially over, gasoline prices continue their free fall.

According to the AAA Fuel Gauge Survey, the national average price of self-serve regular is $2.39 a gallon, more than six cents less than a week ago and down more than 20 cents in the last month.

But the national average takes into account states like California where gas prices remain relatively high. For example, the statewide average in California is $3.26 a gallon. Nevada, Alaska and Hawaii also have average prices above $3 a gallon.

$1.97 a gallon in South Carolina

The real story may be in states where prices are much lower – so low that some stations are selling gasoline at the almost-forgotten price of less than $2 a gallon. In fact, according to AAA, the statewide average price in South Carolina is $1.97 a gallon, the only state with an average price below the $2 mark.

But South Carolina may not enjoy that distinction for long. The average gasoline price in Mississippi is $2.02 a gallon and $2.09 in Tennessee. And in those states it's easy to find plenty of gas stations in certain markets selling fuel at less than $2 a gallon.

In Virginia, where the statewide average is $2.13 a gallon, stations in Tappahannock, Va., are selling gas as low as $1.89 a gallon. In a Tweet over the weekend, GasBuddy's Patrick DeHaan noted that 20 states had at least one station selling few below the $2 a gallon mark. The unmistakable conclusion is that fuel prices are headed lower.

Lowest in more than a decade

“It is unbelievable that drivers are ending their summer vacations with the lowest gas prices for this time of year in more than a decade,” said AAA spokesman Avery Ash.

That said, prices could be – and perhaps should be – even lower. AAA notes pump prices remain relatively high compared to the cost of crude oil. Average gasoline prices are about 41 cents a gallon higher than the lowest daily average in January, when the price of crude oil was about where it is now.

Why aren't prices lower? AAA says higher demand and refineries problems have caused price spikes in certain parts of the country. When the market is running smoothly, AAA says gas prices generally drop about 2.4 cents per gallon for every $1 per barrel change in the cost of crude oil.

With Labor Day now in the rearview mirror and the summer driving season officially over, gasoline prices continue their free fall.According to the AAA ...

Gas prices finally tumble in the Midwest

Meanwhile, motorists in the Southeast enjoy $2 a gallon fuel

Long-suffering motorists in Illinois and Michigan are finally seeing a little relief at the gas pump after refinery repairs have increased fuel supplies in those states.

According to the AAA Fuel Gauge Survey, the average price of self-serve regular in Illinois is $2.72 per gallon, down from nearly $3 a week ago. In Michigan, motorists are paying an average $2.47 per gallon, down 30 cents from last week.

There's still plenty of misery at western state gas pumps, however. In California, the statewide average remains at $3.33 per gallon. The average is just below $3 per gallon in Washington State.

Below $2 a gallon

East of the Mississippi, it's a very different story. Although AAA reports only one state – South Carolina – has a statewide average right at $2 per gallon, motorists in several states are finding fuel below that mark.

In a Tweet, GasBuddy.com senior analyst Patrick DeHaan noted 60% of the stations in South Carolina are selling gasoline for under $2 per gallon. He reports 34.5% of stations in Mississippi, 34.3% of stations in Alabama, 16.4% of stations in Tennessee and Arkansas, 16.1% of stations in Louisiana, and 15.2% of stations in Virginia and Texas are selling fuel below the $2 per gallon mark.

Best Labor Day since 2004

While refinery repairs have brought down prices in the Midwest, much of the rest of the country is seeing the result of the decline in oil prices during the first half of August. Because of the decline, Michael Green, AAA's manager of public relations, says consumers traveling over the Labor Day weekend should find the lowest fuel prices for that weekend since 2004.

“Despite the persistence of some regional refinery issues, average U.S. gas prices are falling at the fastest rates since December,” Green wrote in his weekly blog post. “The BP refinery outage in Whiting, Indiana, which sent prices markedly higher in the Midwest several weeks back, has resumed production. Prices continue to fall week-over-week in the previously impacted states of Michigan, Ohio, Indiana and Illinois.”

Despite the sub $2 gas in the Southeast, the Northeast is facing its own challenges, Green notes. He says the Phillips 66 Bayway refinery in New Jersey is operating at reduced rates. PBF Energy’s Delaware City refinery was forced to shut down its fluid catalytic cracking unit last week due to a fire. Fortunately for motorists in these areas, these East Coast issues have yet to significantly impact prices in the region as supply continues to outpace demand.

“Barring any major supply disruptions, consumers remain poised to pay the lowest national average for the holiday weekend in 11 years,” Green said.

However, a late August surge in oil prices could be a complicating factor. DeHaan says an $11 per barrrel rise in oil prices over just three sessions could impact Labor Day fuel prices.

Long-suffering motorists in Illinois and Michigan are finally seeing a little relief at the gas pump after refinery repairs have increased fuel supplies in...

Late August gas prices the cheapest since 2004

But not if you live in the west or upper Midwest

When it comes to U.S. gasoline prices, it's a tale of two countries. Consumers are enjoying a national average price of $2.57 a gallon – the lowest for late August since 2004, according to AAA.

But it all depends on where you live. That $2.57 average is highly misleading.

For example, if you happen to live in South Carolina, your average gasoline price is the nation's lowest, at $2.10 a gallon. In Alabama you're paying an average of $2.16 and in Mississippi, $2.17 a gallon. Not bad.

But across the country in California, the average price at the pump is $3.45 a gallon. It's $3.02 in Washington state and $2.99 in Illinois.

Refinery outage

Motorists in Illinois and elsewhere in the upper Midwest are still suffering because BP’s largest refining unit at its Whiting, Indiana refinery remains out of commission. Repairs to the unit are said to be ongoing, but in the meantime the crimp in supplies has drastically increased the price of gasoline.

Prices at the pump are especially high in Chicago. In the city, the average price of gas, according to AAA, is $3.45 a gallon, the same as in California. Chicago Mayor Rahm Emanuel and Illinois Attorney General Lisa Madigan have sent a letter to the Illinois Petroleum Council and its member oil companies demanding an explanation for the recent gas price spike.

“Gasoline is not an optional purchase for many hard-working Illinois residents, and paying more for gas means less money to spend on other essentials like rent, groceries and medicine,” said Madigan. “Unfortunately, every time gas prices rise, the oil companies give us excuses. The oil companies need better contingency plans because drivers deserve answers and relief from these outrageous prices.”

Two weeks ago Michigan Attorney General Bill Schuett sent a similar letter to BP, after the refinery issues sent Michigan pump prices skyrocketing.

Playing games?

The state officials, who are no doubt hearing from angry constituents, hint broadly that they suspect refiners and wholesalers are “playing games” with supply to justify significantly higher prices.

“We will not tolerate any unscrupulous behavior that violates Michigan law when it comes to gouging and price fixing,” Schuette warned earlier this month.

In addition to the Midwest, motorists in the western U.S. are feeling pain at the pump. AAA says five of the six states with averages above $3 per gallon are located in this region. California leads the region, and is followed by Alaska, Nevada, Hawaii, and Washington state.

Other western states are not far behind. The state-wide average price of gas in Wyoming is $2.81. In Utah it's $2.77.

When it comes to U.S. gasoline prices, it's a tale of two countries. Consumers are enjoying a national average price of $2.57 a gallon – the lowest for lat...

Oil prices fall but gasoline prices rise

Drivers in the upper Midwest see a surge

Motorists in California and the upper Midwest must be wondering what's up with gasoline prices. While oil prices are plunging and much of the rest of the country has seen prices at the pump fall, those two areas are getting hit hard.

On Friday the price of U.S. crude oil hit its lowest level since the post-financial crisis days of 2009. West Texas crude hit an intraday low of $41.35 a barrel.

But the AAA Fuel Gauge Survey shows gasoline prices are rising. The national average price of self-serve regular is up about 7 cents a gallon in the last week. Prices are up even more in the Chicago area.

GasBuddy.com senior petroleum analyst Patrick DeHaan, who is based in Chicago, Tweeted that prices at one Chicago station rose 30 cents while he was being interviewed about rising gasoline prices.

Disconnect

The disconnect between falling oil prices and skyrocketing gas prices in Chicago and California is blamed on refinery problems. Refineries turn plentiful and cheap crude oil into gasoline, and when refineries slow their output – for whatever reason – it puts a crimp in supplies and prices rise.

Refineries are seeing big increases in profit margins as they are able to buy low and sell high. For that reason refinery stocks have risen on Wall Street in recent weeks. 

This has not escaped notice of state officials in regions where prices are spiking. Michigan Attorney General Bill Schuette has fired off a warning letter to BP, which owns the Whiting, Ind., facility that is experiencing the outage causing the supply bottleneck. He says all major petroleum companies should be more transparent in the case of an outage or other unexpected event.

“As Labor Day weekend approaches, the effects of an outage at a major Indiana petroleum refinery, combined with additional factors, means Michigan families are seeing an increase in the price at the pump. These circumstances do not constitute a free pass for gas stations to gouge consumers,” said Schuette. “We will not tolerate any unscrupulous behavior that violates Michigan law when it comes to gouging and price fixing.”

Michigan sees price surge

While AAA pegs the national average price of gas at around $2.66 a gallon, motorists in the upper Midwest are starting the week paying a lot more. The statewide average in Michigan is now right at $3 a gallon, up more than 50 cents in the last 7 days.

According to AAA, the Detroit metro has the highest prices, averaging about $3.03 a gallon. Saginaw has the lowest, at $2.92.

Motorists in Illinois are paying even more. The statewide average starts the week at about $3.15 a gallon, up about 55 cents in the last seven days.

Drivers in the Chicago metro are feeling the most pain, paying an average of $3.44 a gallon for self-serve regular. In the city of Chicago, gasoline averages $3.61 a gallon.

Drivers in California have been living with high gasoline prices for weeks. The statewide average is about $3.58 a gallon – which Los Angeles motorists paying the most – about $3.84 a gallon.

Motorists in California and the upper Midwest must be wondering what's up with gasoline prices. While oil prices are plunging and much of the rest of the c...

Think gas prices are low? Maybe they should be lower

Falling oil prices have not directly translated to lower gas prices in the U.S.

The tenth anniversary of Hurricane Katrina is coming up at the end of this month, truly one of the worst natural disasters in U.S. history. It was also 10 years ago that gasoline prices skyrocketed and have yet to really fall back to earth.

Katrina caused extensive damage to Gulf of Mexico drilling rigs and refineries along the Louisiana and Texas coasts, interrupting the supply of refined fuel products. It was precisely at that point that prices of petroleum products began to be influenced more by the future markets than by oil producers.

For example, the price of oil in 2004 was $37.66 a barrel, about the price it is today in inflation-adjusted dollars. In 2006, the price of a barrel of oil averaged $58.30 and kept going up until it peaked in 2008 at over $90 a barrel.

Gas was $1.85 in 2004

What happened to the price of gasoline was even more dramatic. In 2004, the average price of gasoline was $1.85 a gallon. In 2006, after Hurricane Katrina, the average was $2.57 a gallon.

Brian, a reader from Utah, reminded us of this recently and asked why gasoline prices, which seem low at a national average price of $2.65, aren't even lower. Since a barrel of oil is now selling for roughly what it did in 2004 – before Hurricane Katrina sent it soaring – why isn't gasoline priced at around $1.85 a gallon, the way it was then?

It's a good question with an interesting answer. It starts with the business assumption that prices should always go up and rarely come down. When prices rise businesses expand, building more infrastructure and hiring more employees. When prices go down, their profit margins are squeezed.

Role of refineries

If cars ran on unrefined crude oil, then you could make a strong case that fuel prices should be completely based on the price of oil. But crude oil has to go through refineries to be turned into gasoline. These refineries then have to distribute gasoline to stations around the country.

One reason oil prices are so low is that there is a supply glut. Producers are pumping so much they are running out of places to store it. Refineries can only handle so much, so they can become something of a bottleneck. When a refinery reduces output for maintenance, or because of a breakdown or accident, it reduces supply and drives up the price. This seems to happen a lot more now than it did in the past.

On the other hand, demand for gasoline continues to grow, but the U.S. isn't expanding its refinery capacity as fast as demand is rising. That said, refineries have plenty of gasoline.

Supply and demand

Refineries are able to keep a certain balance between domestic supply and demand of gasoline by increasing exports of the fuel – which they have been doing for some time.

Check out this data from the Energy Information Administration. It shows U.S. gasoline exports surged in late 2010 and have steadily increased ever since.

In January 2010 the U.S. exported 6.8 million barrels of gasoline. By January 2011 it had doubled. In January 2015 the U.S. exported 16 million barrels of finished motor gasoline.

Why isn't there a national energy policy that would ensure plentiful supplies of gasoline and avoid abrupt price swings? It would be great for consumers, but, frankly, neither of the two political parties seem interested.

Republicans are ideologically inclined not to interfere with markets. Democrats don't like fossil fuels and are not particularly interested in making them less expensive and more attractive.

So to answer Brian's question, when it comes to gasoline prices, what goes up may come down, just not all the way.

The tenth anniversary of Hurricane Katrina is coming up at the end of this month, truly one of the worst natural disasters in U.S. history. It was also 10 ...

Global oil glut predicted to continue through next year

Fastest demand growth in 5 years hasn't put a dent in the supply

No matter how much oil the world seems to consume lately, there's always a lot more to take its place. That trend will continue well into 2016, according to the International Energy Agency (IEA), in its monthly report.

On one hand, demand for petroleum is sharply higher, sparked by improving economic conditions in the U.S. and lower-than-normal fuel prices and growing at the fastest pace in 5 years. But according to the IEA, that's barely made a dent in supplies.

The report says the world oil supply fell nearly 600,000 barrels a day in July, mainly because non-OPEC producers cut back on production. Meanwhile, OPEC countries kept pumping like the price was going up, not down.

Price war

It's widely believed that Saudi Arabia has embarked on a price war strategy to put non-OPEC producers, particularly U.S. oil companies, out of business. OPEC production is clearly contributing to the supply glut that has forced world oil prices lower.

In August, IEA says OPEC crude production held steady near a three-year high. The goal is to force non-OPEC producers to cut back. IEA says it's working.

“As lower prices and spending cuts take a toll, non-OPEC supply growth is expected to slow sharply from a 2014 record of 2.4 million barrels day to 1.1 million barrels a day this year and then contract by 200,000 barrels day in 2016,” the report said.

But there is so much oil out there that it's not going to matter. Inventories aren't going down, they're rising. Inventories were up nearly 10 million barrels in June to hit another all-time high. With all that oil, the world's oil refineries are running at full tilt.

Refinery output

“Global refinery runs reached a record 80.6 million barrels a day in July, 3.2 million barrels a day higher than a year earlier,” the report said.

Looking ahead, IEA makes this prediction: OPEC will continue pumping nearly 32 million barrels a day and the world oil surplus will grow by 1.4 million barrels a day. At that rate, the agency says producers will have a hard time finding places to store all that surplus oil.

It will be the fourth quarter of 2016 – more than a year from now – before world oil demand starts to exceed production, the IEA predicts. That suggests oil prices, which have fallen below $50 a barrel in recent days, won't be going up anytime soon.

That's great news for consumers, of course, but it doesn't automatically translate into cheap gasoline. That's because all that crude oil must first pass through the bottleneck of refineries, where it is turned into gasoline and diesel fuel.

That's where short-term shortages have occurred, as routine maintenance and breakdowns at refineries have slowed output from time to time.

In addition, there are inefficiencies within the gasoline distribution system, which has caused abnormally high prices on the West Coast, particularly in California.

No matter how much oil the world seems to consume lately, there's always a lot more to take its place. That trend will continue well into 2016, according t...

Hybrid owners: enjoy it while you can

California joins states considering a per-mile car tax to replace gas tax

Fess up, hybrid owners. You know this deal's too good to last. Drivers of hybrid and all-electric cars have been basically getting a free ride on America's highways and byways. But the good times are about to stop rolling.

In Washington, attempts to pass a new highway bill are stalled more or less permanently despite the best efforts of the concrete lobby, largely because of disagreements over whether to raise the gas tax. This leaves the states to scratch around on their own and they are increasingly looking at a per-mile tax to replace or, ahem, "enhance" the gas tax.

California is the latest -- and by any measure the largest -- to consider the idea. Even though it has more cars than any other state, its gas tax revenues have been falling in recent years and it,estimates its road repair backlog at $5.7 billion.

Gov. Jerry Brown last year authorized a limited study of the per-mile idea, which is winning growing acceptance around the country.

“We’re going to have to find another way to finance the upkeep of the roads,” Brown said during a January budget briefing. “Whether people use electricity or natural gas or whatever they use, they’re still wearing down the roads.”

What about tolls?

Of course, this brings up the unpleasant subject of tolls -- an increasingly popular way of financing roads, especially in the Washington, D.C., area and elsewhere on the East Coast.

It is not difficult to spend $20 on tolls driving around Northern Virginia -- and that's before you even get within 10 miles of D.C. In Maryland, a tolled portion of I-95 now charges $6 if you have a Maryland-issued EZ-Pass, $8 for everyone else, which surely defines the very concept,of inhibiting interstate commerce and denying equal protection.

Virginia likes to talk about its "public-private partnerships." What that means is that the state sells its roads to private companies who then lease them back to taxpayers, one toll at a time.

Virginia, which is sometimes so far behind it appears to be ahead, charged electric cars an annual surcharge of about $40 until last year, when a new Democratic administration rescinded the charge. The state that prides itself on being the home of the Bill of Rights (and the CIA) just couldn't see how a Prius had a freer right to travel than a Mustang.

While the per-mile tax may sound tame, so did tolls when they started. Many can remember taking extra quarters when driving on the New Jersey Turnpike. Now you need to take extra $20s.

Do the math

How much money are we talking about? The RAND Corp. suggested in a study a few years ago that a per-mile charge of 1.1 cents might generate 20 percent more revenue than gas taxes by 2030. That might solve the states' problems for a little while -- and, of course, the tax could always be raised.

Let's see how those RAND numbers work.,Say you drive 30,000 miles per year. At 1.1 cents per mile, you'd run up an annual tab of $330.

Currently, if you drive a mid-sized car that gets 20 miles per gallon, you're probably burning about 1,500 gallons. In California, the gas tax is supposedly around 18,cents (although some would argue it's closer to 40 when you add in various fees and surcharges) so you're paying about $270. In Virginia, the tax is 11 cents (not counting hundreds of dollars per month in tolls for many unhappy commuters), so the comparable figure is $165.

Good deal, no? Well, maybe, although no one says RAND's 1.1 cent per mile charge will stick. And there's some question about the additional fees that get tacked onto gas purchases in addition to the gas tax.

Also, tax-wary conservatives note, consumers currently are to a great extent in control of how much they pay for highway usage. If you want to spend less on gas and gas taxes, you can always get a Prius, Chevy Volt, or even a Tesla.

Most Volt owners average 85 miles per gallon, which gets your annual fuel consumption down to about 352 gallons, running up a tax bill of $63,in California or $38 in Virginia (wow, old Tom Jefferson was right on target with that $40 annual fee).

Differing goals

The problem now, obviously, is that the states and their subjects have differing goals. The states want more money, their taxpayers want to pay less, or at least not more, while still having roads that don't crumble beneath their wheels.

The per-mile tax idea might fly in states already being strangled by lousy highways and outrageous tolls (e.g., Virginia and Maryland), but it could be a hard sell elsewhere.

One thing you can count on: if a per-mile tax is eventually enacted,,crafty legislators will build in a provision that allows an unelected commission of some sort to set the tax rate based on some obscure,formula so that future generations of politicos can decry the ever-rising rate while professing that there have no control over it.

Fess up, hybrid owners. You know this deal's too good to last. Drivers of hybrid and all-electric cars have been basi...

Senate bill would raise gas tax 4 cents per year for 4 years

The measure would extend some tax credits to make up for the higher gas tax

He doesn't have many supporters for the measure, either in Congress or out, but Sen. Tom Carper (D-Del.) is pushing for four years of four-cent gas tax hikes to fix the nation's highway funding shortfall.

The Highway Trust Fund is running short of money in part because the current generation of fuel-efficient cars aren't burning as much gas as their predecessors -- meaning that while inflation keeps pushing up the cost of highway construction and maintenance, gas tax revenues stay flat or even decline.

"Rather than lurching from crisis to crisis, increasing country's debt, and borrowing more money from foreign governments to pay for our transportation system, I say it’s time to do what’s right," Carper said. "At a time when gas prices are some of the lowest we've seen in recent memory, we should be willing to make the hard choice to raise the federal gas tax."

To balance the 16-cent cost of a gas tax hike, Carper suggests making permanent certain expiring tax cuts that he says would "directly benefit hard-working Americans."

The legislation would also extend and expand the earned income (EITC) and child (CTC) tax credits. It would make both credits permanent, as well as expand the EITC for childless workers, index the CTC to inflation, and make it easier for working Americans who qualify to claim the EITC, Carper said.

Carper's bill, the Traffic Relief Act, isn't given much chance of passage in a GOP-controlled Congress that generally opposes any tax increase.

What about hybrids?

Any mention of the gas tax always brings up the issue of hybrids and all-electric cars, which use less or, in the case of all-electric cars, no gas and thus pay less or no gas tax.

On the one hand, fairness seems to dictate that those cars should pay some alternative fee for using the nation's highways. On the other, environmentalists say the cars' other benefits should earn them a free ride.

There aren't really enough zero-emission cars out there to make much of a difference financially but conservatives have a hard time accepting the notion that greenies should thumb their noses at the gas tax while pick-up truck drivers pay through the nose.

Until recently, Virginia had a special yearly tax for electric cars but it was withdrawn when Democrats took over several statewide offices in the most recent election.

He doesn't have many supporters for the measure, either in Congress or out, but Sen. Tom Carper (D-Del.) is pushing for four years of four-cent gas tax hik...

Gas prices at lowest point since 2009

Refineries back on line, crude oil still cheap. It adds up to a bargain for consumers

It doesn't get much cheaper than this. American drivers are paying the lowest average price for gas for this date since 2009. The current national average of $2.65 per gallon is a savings of 85 cents per gallon from this date a year ago, AAA reports.

The resolution of local refinery issues and lower prices for crude oil are keeping downward pressure on gas prices, although volatility continues to characterize several regional markets due to unexpected drawdowns in supply, AAA analysts say.

While some states may not experience significant price drops as a result of regional supply and distribution issues, the national average is expected to keep moving lower leading up to the Labor Day holiday, barring any unexpected spikes in the price of global crude oil or unexpected disruptions to domestic production.

Keep in mind that all prices quoted are average. Actual prices will vary depending on location, time and local market factors. Drivers who don't like the price at one service station should check others in the area. Online sites like GasBuddy offer local comparison shopping.

Higher in the West

Pump prices west of the Rockies remain the most expensive in the nation and all seven states with averages above $3 per gallon are located in this region. Drivers in California ($3.74) are paying the nation’s highest averages for retail gasoline and are followed by Alaska ($3.48), Hawaii ($3.28), Nevada ($3.24) and Washington ($3.17) as top five most expensive markets for motorists.

Although prices on the West Coast appear to be easing, retail averages remain volatile based on shifts in supply and demand. Alabama ($2.266) is the nation’s least expensive market, unseating South Carolina ($2.269) by fractions of a penny.

With the exception of Indiana (+2 cents) and Alaska (+1 cents), pump prices are down in every state and Washington, D.C. over the past week. The largest discounts in price are seen in Ohio (-14 cents), Kansas (-11 cents) and Minnesota (-11 cents), while consumers in 24 states and Washington, D.C. are enjoying weekly saving of a nickel or more per gallon.

It doesn't get much cheaper than this. American drivers are paying the lowest average price for gas for this date since 2009. The current national average ...

Consumers renew their love affair with trucks, SUVs

July vehicle sales show the impact of falling gasoline prices

The new vehicle sales figures for July suggests that there is no economic slowdown when it comes to buying a new car or truck. It also shows the impact of sub $3 a gallon gasoline prices.

Ford had its best July since 2006, powered higher by incredibly strong sales of trucks and SUVs. Ford trucks – the F-Series – led the way, outselling every other category and posting a 13% increase over July 2014.

Van sales increased 14% last month with a total of 16,090 vehicles sold. The all-new Transit, which posted sales of 8,025 vehicles for July, drove Ford’s commercial van business to 15-year sales highs.

SUVs up 11%

Ford brand SUV sales of 67,282 vehicles represent an 11% increase over year-ago levels, delivering the best July sales results since 2005. Escape sales increased 10%, with 29,253 vehicles sold, representing an all-time July sales record.

Already-strong Explorer momentum continued with 21,361 sales – a 27% increase. The Edge contributed to the increase as well, with sales up 17% for July. Edge and Explorer are turning fast on dealer lots at just 18 days and 13 days, respectively.

Ford sold a total of 222,731 vehicles last month, an increase of 5%.

“With continued improvement in inventory, F-Series retail momentum continued building in July,” said Ford VP Mark LaNeve. “Customers truly value the new F-150’s capability, performance, and fuel efficiency.”

GM joins in

GM also had a banner July, with overall sales up 15%, its best showing in eight years. Again, truck sales were huge for GM, with sales of pickups rising 51%.

The Silverado was up 34% and Colorado sales totaled 7,209 units. GM says the Colorado remains America’s fastest-selling pickup.

Fiat-Chrysler also had a strong month, helped along by strong sales of Dodge trucks.

“July’s sales results prove that the “truck party” is still raging,” said Eric Ibara, director of residual values for Kelley Blue Book. “With low gas prices projected for the foreseeable future, there are no indications that this trend is temporary. This shifts the advantage to the domestic manufacturers, whose lineups feature volume models that are trucks rather than sedans, especially Ford.”

Since trucks are often used in light construction, sales of new trucks are often seen as a positive sign for the economy. The fact that gasoline prices have been below $3 a gallon in most areas for most of the year doesn't hurt either.

On the other hand, Ibara says the long-term trend doesn't look all that promising for hybrids and other alternative energy vehicles.

The new vehicle sales figures for July suggests that there is no economic slowdown when it comes to buying a new car or truck. It also shows the impact of ...

Report makes argument for lifting ban on U.S. oil exports

Claims prices would drop 8 cents gallon

Consumers paying attention to the price of crude oil this spring may have wondered why gasoline prices were slow to fall while oil prices were plunging.

After regaining stability in May and June oil prices are falling again, with some analysts predicting they could touch $30 a barrel before the end of the year. But if they do, it doesn't necessarily follow that gasoline prices will go below $2 a gallon as many consumers would like.

For crude oil to become gasoline it has to pass through refineries, and that's where bottlenecks tend to occur. When refineries don't keep up with the demand for gasoline, for whatever reason, the price tends to go up.

But dirt cheap oil, and gasoline that's only relatively cheap, translates into fat profit margins for refineries.

Increasing profits

Major refiner Valero Energy reported a quarterly profit of $2.66 a share Thursday, blowing away the Zacks Equity Research estimate of $2.41. Zack's reports the company's profit margin on a barrel of oil rose from $9.84 to $13.71, year-over-year, a 39% increase.

It's against that backdrop that IHS Inc., a business intelligence company, has issued a report making a case for lifting the ban on U.S. oil exports. Congress enacted the ban in the 1970s, when the U.S. imported much of its oil and was suffering from periodic shortages that spiked prices.

It's a very different environment today, the report argues, pointing out that the U.S. now produces more oil than it can use. That, it says, creates inefficiencies in the supply chain, further decoupling the price of gasoline from oil prices.

The study found that the wholesale price of gasoline in the inland Chicago market continued to track those in other markets in recent years, even when when U.S. oil production grew and prices relative to international oil prices declined.

The gasoline price in that market continued to track prices in other domestic and international hubs rather than weaken with the U.S. crude price.

“This latest analysis further confirms what IHS research has consistently shown – that the fear that lifting the ban on U.S. crude exports would raise U.S. gasoline prices is unfounded,” said Kurt Barrow, IHS vice president, downstream energy.

A global commodity

Barrow says that's because U.S. gasoline is a global commodity. It's traded on the international market and international prices influence what American motorists pay.

U.S. crude oil is not an international commodity, since it can't be exported. If it could, the report claims there would be more oil available on the world market, which would bring down gasoline prices in nearly every country.

“Removing the crude export ban would actually lower U.S. gasoline prices by increasing the supply of crude on the global market that is central to determining the price of gasoline the world over,” Barrow said.

The IHS report says removing the export ban on U.S. oil would lower the retail price of gasoline by about 8 cents a gallon. It says such a move would also revive the U.S. oil industry, which has been forced to curtail production in the way of the Saudi Arabia-engineered supply glut.

Will it happen? Probably not anytime soon. Neither party has expressed much of an appetite for lifting the ban and, with an election year looming, neither is likely to propose it.

Consumers paying attention to the price of crude oil this spring may have wondered why gasoline prices were slow to fall while oil prices were plunging. ...

Consumers enjoying lowest summer gas prices since 2009

So far, refineries are keeping up with demand -- except in California

Don't mention this to consumers in California, but the U.S. is enjoying the lowest summer gasoline prices in years.

While Los Angeles area motorists are paying well over $4 a gallon for gas this week, the Energy Information Administration (EIA) reports that the average retail price for gasoline this summer – April through September – is expected to be $2.67 a gallon, a dime less than the current national average.

The prediction is based on EIA's Short-Term Energy Outlook and the $2.67 figure is the lowest since 2009.

California's woes are the result of inefficiencies in the supply chain. For example, the state received no imports of gasoline in early July, leading to acute shortages in the state.

Ample supplies outside California

EIA's report suggests supplies are holding up well elsewhere, in spite of increased consumption. EIA expects travel and gasoline consumption to be higher this summer compared to last year. Motor gasoline consumption is expected to increase by 194,000 barrels per day, up 2.1% from last summer, reflecting a number of positive factors.

Not only are prices at the pump substantially lower, EIA says consumers have higher real disposable income, more employment opportunities, and growing consumer confidence. The lower fuel prices, the agency says, are largely the result of the projected 41% year-over-year decline in the average price of North Sea Brent crude oil, the U.S.'s main source of imported oil.

EIA arrives at its predictions by measuring the product supplied, which reflects refinery and blender output, inventory change, and net imports, as a proxy for consumption. Net refinery output is expected to increase by 208,000 barrels per day, staying slightly above growth in consumption.

The main inventories of gasoline and gasoline blending components began the summer season 10.7 million barrels above the previous 5-year average and should end the season 3.7 million barrels above the previous 5-year average.

Consumers drew 8.4 million barrels on inventories last summer. This summer, that should grow to 14.3 million. Supplies should remain fairly tight but not enough to affect retail prices.

California inquiry

California motorists may soon get some relief from high prices, but no doubt are getting tired of the constant price roller coaster. According to AAA, the California Energy Commission is now investigating what's behind the volatility.

California refineries are putting out plenty of gasoline but the state still has to import fuel from other areas to meet its needs. As AAA observes, suppliers often operate in “just-in-time” gasoline inventories, with supply delivered only as demand requires it. It limits storage costs but can lead to significant spikes in price when supply and demand are out of balance.

“Upward pressure is likely to remain on prices in the region until supply issues are resolved,” AAA said.

Lingering supply issues in the Midwest have mostly been resolved and motorists are reaping the benefits. AAA says the average retail price of a gallon of regular gas has fallen 12 cents in Indiana and 11 cents in Michigan.

Don't mention this to consumers in California, but the U.S. is enjoying the lowest summer gasoline prices in years.While Los Angeles area motorists are...

Lifting of Iranian sanctions will add to world oil glut

But it might not make much difference in the price of gasoline

The agreement announced Tuesday between six world powers and Iran, to slow that country's nuclear program, will result in the lifting of economic sanctions against Iran that have been in place for years.

Among other things, that means Iran can start exporting its oil again. When it does, it will find very different market conditions.

The last time Iran sold oil, it was a seller's market. Today, it's a buyer's market.

Iran's oil ministry has promised it can quickly ramp up to 1 million barrels of oil a day on the world market, but with an existing oil glut from over production and consistent declines in worldwide consumption, it will make much less per barrel than it once did.

Immediate price drop

With the announcement of an Iranian deal, the price of crude oil dropped more than 1.5% to $51.32 a barrel. Before the sanctions, Iran was getting around $100 a barrel.

“Iran’s efforts to raise oil exports could not have come at a worse time, given the market’s lingering oversupply,” Michael Cohen, an energy analyst at Barclays, told The Wall Street Journal.

Ordinarily, this would be great news for U.S. motorists, sending prices at the pump lower. But there appears to be a limit to what effect falling crude oil prices have on what motorists pay for gasoline.

The national average price of regular gasoline has been below $3 a gallon for months now. Lower oil prices, due to a building over-supply, will have a muted effect because the crude oil has to be turned into gasoline at refineries, and there is a finite refinery capacity.

Stability

But while the Iran deal might not send U.S. gasoline prices lower, it should keep them from going up, even with the country using more fuel.

“The demand for gasoline has been impressive over the last few months,” Patrick DeHaan, senior petroleum analyst at Gas Buddy, told ConsumerAffairs. “This summer demand for gasoline has been the highest in years, most likely due to the lower price.”

As long as demand does not outstrip refineries' ability to produce gasoline, pump prices should remain stable. The addition of Iranian oil to the world supply guarantees the glut of oil isn't going away anytime soon.

California still feeling pain

Currently, the national average price for self-serve regular is about $2.78 a gallon, according to the AAA Fuel Gauge Survey. As we reported last week, prices have shot up in California due to supply issues.

The average price in California is $3.80 a gallon, up 37 cents in the last week. Consumers in the Los Angeles area are feeling the most pain, paying an average of about $4.20 a gallon for gasoline.

The agreement announced Tuesday between six world powers and Iran, to slow that country's nuclear program, will result in the lifting of economic sanctions...

Gasoline prices surging in California

Analyst predicts pump prices could quickly rise by up to 50 cents a gallon

Gasoline prices always tend to be higher on the West Coast, but motorists in California are almost dizzy because of how prices have jumped in the last couple of days.

The Energy Information Administration (EIA) report on Wednesday showed almost no gasoline was imported into California in the previous week. With refineries in the state already operating under maintenance schedules and trying to meet growing demand, the market immediately reacted to the growing shortfall.

“In the next 48 hours prices in California are expected to jump 25 to 50 cents a gallon,” Patrick DeHaan, senior petroleum analyst at Gas Buddy, told ConsumerAffairs. “In some cases we're already seeing people on social media reporting gas stations raising prices 80 cents in one day.”

The price escalation began Wednesday when the implications of the numbers became clear. Refineries increased shipments to California weeks ago because prices were rising.

When the gasoline market became saturated, the wholesale price began to fall and suppliers started looking elsewhere. As a result California got shortchanged.

42 million barrel shortfall

“Because there were no imports into California, gasoline inventories on the West Coast declined by 42 million barrels in one week,” DeHaan said. “That's a huge drop and it put California's supply of gasoline below what I would consider a healthy level.”

Wholesale prices went through the roof in the moments and hours after the EIA report became public; on Thursday they surged even more. DeHaan says there could even be temporary shortages.

“It's becoming very hard to find gasoline in California and don't be surprised if some stations there decide not to fill their tanks,” he said.

That's because these sky-high prices won't last. Because of the current shortage, shipments will likely surge in the next few days, bringing the wholesale price back to earth. If a station has paid the current high price for fuel, it will be stuck with overpriced product when competitors are selling it for much less. If stations can wait a few days, the price might be much less.

Game of roulette

“It's a game of roulette,” DeHaan said. “If prices go up a buck a gallon, they'll eventually come back down by that amount.”

With market forces in play, California will go from having virtually no imported gasoline to being flooded with the stuff.

“You now have refineries throughout the globe trying to secure tankers to send gasoline to California because of the absolute insanity and the lofty prices they can lock in,” DeHaan said.

And that will continue the vicious circle. A huge influx of supply will bring down prices. In the meantime, however, consumers will feel some pain at the pump.

“This market isn't going to see any relief for at least a couple of weeks,” DeHaan said.

In the meantime, DeHaan says the refineries that are producing gasoline in California “are making a windfall.”

California and other West Coast drivers may be particularly irked that their fuel prices are surging at a time when crude oil prices are falling even more, but the excess supply of petroleum isn't helping because the refineries first have to turn it into gasoline. At the present time, they lack the capacity to do that, DeHaan says.

Gasoline prices always tend to be higher on the West Coast, but motorists in California are almost dizzy because of how prices have jumped in the last coup...

July 4th motorists to find higher-than-expected fuel prices

Pump prices are coming down but not that fast

The predicted summer decline in U.S. gasoline prices has been slow to materialize. While July 4th travelers will find fuel prices much lower than last year, they have been slow to fall from their normal springtime highs.

Gas Buddy's senior analyst DeHaan Tweeted Monday that 9 states saw gasoline prices go up overnight, 4 remained unchanged and 37 went down. DeHaan reports 14.8% of U.S. stations are charging under $2.50 a gallon, up from 10.7% week ago.

Prices may now be moving in the right direction for motorists but DeHaan and many other industry analysts had expected them to be lower than they are right now. Prices at the pump rose steadily over the late winter and early spring as refineries curtailed operations for seasonal maintenance and completed the switch over to summer blends of gasoline.

Still on the high side

Now that all that is out of the way and the price of oil remains about 60% of what it had been, it's reasonable to expect gasoline prices would be a bit lower by now.

AAA notes that pump prices often fall leading up to the Independence Day holiday. What's different this year, it says, are regional supply shortages due to localized refinery issues and global crude prices that have recovered from multi-year lows this spring.

As it is, motorists traveling over the holiday can expect to pay around a national average $2.77 a gallon, according to the AAA Fuel Gauge Survey. That's actually 3 to 4 cents a gallon higher than last May, when prices should just about have peaked.

Hard to complain

Still, it's hard to complain when the average national price of gasoline is about 90 cents a gallon than it was last year. This holiday weekend, travelers will find the highest gasoline prices in California, Washington and Oregon. It'll be least costly to fill up in South Carolina, Mississippi and Alabama.

AAA says concerns about oversupply continue to characterize the world oil market, keeping prices from rising. Lately, worry about a Greek default has been depressing prices but for the last several months it has been the growing gut of oil, especially in the U.S that has kept prices down.

One industry analyst, Leonard Brecken of Oil Price, has raised the possibility that the glut doesn't really exist, but is an invention of the U.S. Energy Information Administration (EIA). Brecken notes that the EIA began to revise U.S. oil production totals right at the time that there have been large increases in U.S. consumption.

That has two effects, he says. It could mean the U.S. has less oil than it realizes, setting up a future price shock. Second, it's having a devastating impact on small, independent oil produces who might be out of business by the time the country realizes it needs to start pumping more oil.

The predicted summer decline in U.S. gasoline prices has been slow to materialize. While July 4th travelers will find fuel prices much lower than last year...

Industry analysts predict gasoline prices ready to fall

Prices usually go down in June but history doesn't always repeat itself

Gasoline prices began the month of June at their high for the year, up more than 70 cents a gallon since January, but they remain well below recent historical norms.

A number of industry sources are predicting prices at the pump will be headed lower soon, treating drivers to what AAA predicts will be the cheapest summer gasoline prices since 2009.

“This could be the year of the summer road trip with lower gas prices motivating millions of people to travel,” said AAA spokesman Avery Ash,. “Many drivers are likely to save hundreds of dollars this summer as gas prices remain more affordable than in recent years.”

Even though prices have been creeping higher for weeks, to a national average of around $2.76 a gallon, fuel is a lot cheaper than it was at this time last year when it averaged $3.66 a gallon. And it might be about to get even cheaper.

June pattern

GasBuddy.com's Will Speer, writing on the site's blog, notes that there is a well established pattern of falling pump prices after Memorial Day, especially in certain markets.

“Looking at the average of the last 5 days of May and June over the last 5 years, we see a common trend among the 4 largest U.S. markets,” Speer writes. “Los Angeles, despite having the highest absolute gas price, had the second highest drop in gas price from May to June with 11.3 cpg. The volatile Chicago market had the largest decrease in prices at 16.3 cpg over the 5 year period.”

For its part, AAA says gas prices lose upward momentum in June as refineries complete seasonal maintenance and gear up production for the busy summer driving season. Gas prices have declined by an average of 12 cents per gallon in June over the past five years.

“This production trend likely will continue this year, which means gasoline supplies could soon grow even more plentiful,” AAA says.

Exceptions

Maybe, but there are always exceptions and analysts will stay busy scanning the latest industry data for signs of anomalies. For example, in the 4 largest markets last year, prices actually rose slightly in June.

In it's release of petroleum data this week, the U.S. Energy Information Administration (EIA) reported a decline in both gasoline and crude oil inventories, a trend not usually associated with price declines.

However, the drop in crude supplies was slight and the stockpile remains 88 million barrels above last year's levels. So there is plenty of oil on hand.

And even with a slight drop in gasoline supplies, to 220 million barrels, that's still 4% higher than a year ago when gasoline prices were well above $3 a gallon.

Refineries operated at only 93% of capacity last week but the EIA report notes that total products sent to market over the last 4 weeks averaged nearly 20 million barrels a day, up 4.3% over the same period last year.

Gas Buddy predicts areas of the upper Midwest may be slower to see price declines than elsewhere in the U.S. It says 2 major refineries in the Chicago area are still undergoing maintenance. A new refinery issue in Toledo is expected to keep supplies tight for a while in the Great Lakes region.

Gasoline prices began the month of June at their high for the year, up more than 70 cents a gallon since January, but they remain well below recent histori...

Highways, airports face crowded weekend

Recent rise in fuel prices shouldn't deter holiday travelers

If you plan to spend the Memorial Day weekend at home, grilling some burgers or simply relaxing on the patio, you may be in the minority this year. With lower fuel prices and higher employment numbers, more people are packing their bags.

Despite the fact that gasoline prices have crept higher over the spring, the national average price of self-service regular is about 90 cents a gallon less than last Memorial Day weekend. According to AAA’s Fuel Gauge Survey, the highest average price is in California, at $3.78 a gallon (remember, it's an average; many prices will be higher than that). The lowest state average is South Carolina’s, at $2.42 a gallon.

Price surge

According to AAA, prices at the pump “surged” ahead of the holiday weekend, despite the fact that oil prices have remained fairly stable. With the exception of Pennsylvania, where the price has moved lower by fractions of a penny, consumers in every state and Washington, D.C. are paying more at the pump week-over-week, AAA reports.

The recent trend of rising prices, however, should not deter motorists. The gasoline monitoring site GasBuddy.com has released a survey showing 73% of consumers plan to travel between this weekend and Labor Day, with 83% estimating they will take at least two trips during that time.

“People can’t get enough of the classic, summer road trip,” said Patrick DeHaan, senior petroleum analyst for GasBuddy. “Nearly half of the people who responded claimed they love going on them and wish they could take more. Even with the current uptick in gas prices, we predict most U.S. travelers will pay the cheapest Memorial Day gas prices since at least 2009.”

The GasBuddy survey found that 85% of road trippers plan trips of more than 200 miles round trop, with half expecting to drive a total of 500 miles. The top reason for hitting the road is to visit family and friends.

Declining infrastructure

The U.S. Travel Association says people taking road trips and catching flights at major airports will likely notice a need for improvements in the nation’s transportation infrastructure.

“Our roads and skies are nearly busting at the seams, and as the economy improves we’re only going to see the number of travelers increase,” said association CEO Roger Dow. “With many of our national transportation policies set to expire this year—some within just two short weeks—we encourage policy leaders to look to long-term solutions to address these capacity concerns and support legislation which provides for a sustained and robust infrastructure, keeping travelers on the move and our economy thriving.”

Even so, economists at the U.S. Travel Association predict consumers traveling over the Memorial Day weekend will spend an average of $330 per person.

If you plan to spend the Memorial Day weekend at home, grilling some burgers or simply relaxing on the patio, you may be in the minority this year. With lo...

Why gasoline prices should stay low for a long time

Producers are still pumping oil despite selling less of it

If gasoline prices quickly rise in the next several months, it won't be because oil prices have gone up. More and more industry experts believe world oil prices will remain flat for the foreseeable future and U.S. government data tends to agree.

Since last fall consumers have enjoyed gasoline prices averaging under $3 a gallon in almost all areas of the country, made possible by the sharp drop in world oil prices. The price of oil has declined because there is too much oil on the market and not enough demand.

While prices have slowly crept back up to $60 a barrel, the latest government forecasts suggest there may not be enough demand to push them much higher. This is a remarkable turnaround from just a few years ago.

2008's record high prices

Just before the financial crisis of 2008 gasoline prices hit a record high, with a national average of $4.17 a gallon and the price over $6 in some areas. At the time the U.S. was already in the midst of a recession but it was said the rest of the developing world, principally China, had a voracious appetite for oil.

Even after the price of oil crashed in late 2008, it was climbing again early in 2009, primarily because China was a major importer. Then, two things happened that brought us to where we are today.

First, the U.S. oil industry roared to life, thanks to fracking technology. U.S. oil production surged in places like North Dakota and Ohio, rivaling the output in more traditional oil producing areas.

The U.S. is producing so much oil that Saudi Arabia has entered a price war with U.S. producers, trying to drive down the price and gain market share. In short, producers are pumping more oil than the world needs right now.

Demand hasn't materialized

It was expected that world oil demand would eventually suck up the excess production, but that hasn't happened – and might not for a longer than expected time. It turns out that China's robust economic machine is slowing down, as are economies in other developing nations that in the past have driven up the price of oil.

After processing all this data, the Energy Information Administration (EIA) concludes that U.S. gasoline price should remain stable, allowing for seasonal fluctuations at refineries.

“EIA expects U.S. regular gasoline retail prices, which averaged $3.36/gal in 2014, to average $2.43/gal in 2015 and $2.63/gal in 2016,” EIA said in a report this week. “The average household is expected to spend $675 less for gasoline in 2015 compared with last year because of lower prices.”

Even though the long-term trend looks promising for motorists, AAA reports the national average price of gasoline has increased 26 out of the last 27 days. Regional refinery issues on the West Coast have pushed up prices in a handful of states, mostly in the west but prices are expected to head lower in June.

California is the most expensive state in which to drive, with an average gasoline price of $3.72 a gallon. South Carolina, at $2.37 a gallon, is the cheapest.

If gasoline prices quickly rise in the next several months, it won't be because oil prices have gone up. More and more industry experts believe world oil p...

Lower gas prices likely to produce a lot more Memorial Day travelers

Prices at the pump are about $1 a gallon cheaper than last year

Millions of people are going to be taking to the nation's highways over the Memorial Day weekend – May 21 – 25, and unlike the last few years, they're going to feel a little better about it.

Since 2008 refueling stops on the first unofficial weekend of summer were filled with angst. In 2011 prices had just peaked at a national average price of just under $4 a gallon when the holiday weekend arrived.

Gasoline prices vary state to state but most drivers will likely see the lowest Memorial Day pump prices in at least 5 years. The recent national average price of $2.66 a gallon suggests rising prices during the spring, due to refinery maintenance and the switch-over to summer blends of fuel, has just about peaked.

$1 a gallon less

Even at that elevated price – about 26 cents a gallon more than a month ago -- fuel is $1.00 less than last year's average Memorial Day price.

Travel is expected to be up all the way around with AAA projecting that 88% will travel by car and another 2.6 million booking flights on airlines, an increase of 2.5% from last year.

While gasoline prices and air fares are down travelers may find it more expensive this year to stay in a hotel. Still, AAA says many consumers are ready to splurge a little.

"Following a harsh winter, many Americans are trading in their snow boots for flip flops and making plans to start the season with a vacation getaway," said Marshall L. Doney, president of AAA. "AAA is expecting more Memorial Day travelers this year than any time in the past 10 years as confident consumers come out of hibernation ready to explore national parks, beach destinations and America's great cities."

Lower gasoline prices, which have yet to make much of an impact on economic data over the last 6 months, may finally be showing up. Doney says savings at the gas pump, along with more encouraging hiring data from U.S. employers, are lifting both consumers' optimism and their disposable income.

Travel tips

For travelers hitting the road a couple of weeks from now, AAA has some advice; inspect your car – particularly battery and tire condition – before heading out on a holiday getaway. AAA says its principal Memorial Day weekend road service calls are for flat tires and dead batteries, along with lock-outs.

If you plan to travel by air to your holiday weekend destination, the Transportation Security Administration (TSA) reminds travelers to plan for extra time to clear security.

TSA said it screens approximately 1.8 million passengers each day at more than 450 airports nationwide. During major holidays, including the Memorial Day travel period, TSA sees a spike in the number of passengers screened at airport checkpoints across the country.

If you or a member of your party has disabilities or medical conditions that make air travel difficult there's a special TSA hot line that will answer questions about screening policies, procedures and what to expect at the security checkpoint. Injured service members and veterans including individuals associated with a wounded warrior program may contact TSA Cares to help facilitate the screening process.

The hotline number is 1-855-787-2227.

Millions of people are going to be taking to the nation's highways over the Memorial Day weekend – May 21 – 25, and unlike the last few years, they're goin...

Why gasoline prices go up early in the year

In part, it's the cost of cleaner air

In most areas of the country gasoline prices have started to drift lower again after rising during most of January and February. It's a pattern that tends to repeat itself every year.

But why? And why this year, when crude oil prices have remained at multi-year lows?

There are two main reasons and both, at least indirectly, are the result of U.S. government policies.

During February, U.S. oil refineries switch over to producing a summer blend of gasoline, which costs more to refine than the grade of gasoline used during the winter months. According to Popular Mechanics, winter gas is cheaper to produce but worse for the environment.

There is another complicating factor. Because of overlapping state and federal regulations, U.S. refiners must blend about 20 different grades of gasoline to meet these regulations.

Smog prevention

The regulations were put in place to control volatile organic compounds, known as VOCs. When fuel has more VOCs during hot weather these compounds are more likely to produce smog.

The switch-over process can also produce added costs for consumers. That's because it normally reduces a refinery's gasoline output temporarily. That smaller output reduces the nation's stockpile for gasoline –again, only on a temporary basis.

But because gasoline – like oil – is a commodity sold in a market, its price will fluctuate, based on what market traders expect the cost to be in the future. Patrick DeHaan, senior analyst as Gas Buddy, a company that tracks retail gasoline prices nationwide, says news of a refinery problem anywhere during the winter can send prices higher.

“Unfortunately motorists are stuck paying the price traders are buying at,” DeHaan told ConsumerAffairs. “A refinery kink develops and traders are forced to increase their bids. It's unfortunate that motorists are on this wild rise because, essentially, there's a declining number of refineries.

Fewer refineries

That's another contributing factor to volatile gasoline prices – there are fewer refineries in the U.S. turning crude oil into gasoline. DeHaan says just two decades ago the U.S. had 100 more refineries than it does now.

“They were smaller in size and more spread out, which is part of the reason why they closed,” DeHaan said. “Not to say the Clean Air Act is bad but some smaller refiners decided it wasn't worth the cost of compliance with some of these air pollution requirements that had been placed on them by the EPA and instead of installing controls they've closed.

As a result the U.S. now relies on fewer but larger refineries. That, says DeHaan, makes consumers more vulnerable to price volatility.

“When there is an event at one of these refineries it is more disruptive of the flow of gasoline to the pump,” he said.

In most areas of the country gasoline prices have started to drift lower again after rising during most of January and February. It's a pattern that tends ...

Gasoline prices surge in the Midwest this week

Spike linked to refinery issues and should be temporary

Gasoline prices in the U.S. are still lower than they have been in years but nonetheless are higher than they were a month ago. And in a handful of Midwestern states, sharply higher.

According to the AAA Fuel Gauge survey, the average price of self-serve regular in Indiana jumped 10 cents a gallon in 24 hours, from $2.16 a gallon to $2.26. In Michigan, the average price also jumped a dime a gallon, from $2.25 to $2.35 a gallon.

In Illinois, the increase is much less dramatic, rising from $2.35 a gallon to $2.38. But the average price of gasoline surged in Ohio, jumping from $2.19 a gallon to $2.29.

Patrick DeHaan, senior analyst at gas price monitoring site Gas Buddy, links the Great Lakes region price surge to refinery issues and the seasonal switch over to summer grade fuel and says the higher prices should be temporary.

Conspiracy theories

“Conspiracy theories abound with these seasonal refinery problems that always have a tendency to develop almost on schedule,” DeHaan told ConsumerAffairs.

In the rest of the U.S., prices at the pump have been slowly coming down again after rising early in the year, as refineries reduced capacity for winter maintenance. In fact, AAA reports fuel prices rose 40 straight days before starting their descent.

The national average price of self-serve regular, according to AAA, is around $2.42 a gallon. AAA spokesman Michael Green says the seasonal hike in gasoline prices is being offset in part by the huge build in oil reserves and a falling price for crude.

“Crude oil prices declined by more than 10% last week due to abundant supplies, a stronger U.S. dollar, and the possibility of even more oil entering the market soon,” Green writes in a AAA commentary. “Every $10 per barrel decline in the cost of crude oil can send gas prices down by nearly 25 cents per gallon.”

West Coast price rise

West Coast gasoline prices have also started to come down a bit after that region suffered its own refinery issues, which sent prices at the pump sharply higher. In a highly unusual ranking, California has the highest average fuel cost in the nation – $3.37 a gallon – even higher than Hawaii, normally the highest in the U.S., because of taxes and transportation costs.

At the other end of the spectrum, motorists in the southeast are enjoying the lowest prices. South Carolina has the lowest average price – $2.13 a gallon.

Lower prices this summer

In some good news for consumers, DeHaan says those lower fuel prices will likely be the norm across the U.S., once refineries complete their maintenance and the switch over to the summer blend of gasoline.

“Summer time is looking good, like it will be best summer to hit the road in the last 5 years,” DeHaan said.  

Gasoline prices in the U.S. are still lower than they have been in years but nonetheless are higher than they were a month ago. And in a handful of Midwest...

Oil prices expected to be stable for foreseeable future

Industry report predicts U.S. oil producers will emerge from current price war even stronger

U.S. motorists can expect prices at the pump to rise and fall over the rest of the decade, but price movements should be gradual, not like the volatile fluctuations of the last 10 years.

That's one of the takeaways from the International Energy Agency's (IEA) Medium-Term Oil Market Report, issued this week. In it, the IEA tries to make sense of the recent plunge in world oil prices and what it might hold for the future.

The good news for U.S. consumers is a return to greater price stability. It will be easier to budget for fuel costs.

The recent dramatic drop in oil prices, which led to a corresponding decline in prices at the pump, was partly the result of Saudi Arabia's refusal to trim production to draw down a growing surplus of oil. With the Saudis and the rest of the world's oil producers maintaining their normal production levels, that surplus is growing, resulting in the lower gasoline prices consumers have enjoyed lately.

Oil price war

The assumption has always been that the Saudis were willing to drive oil prices lower to hurt U.S. shale oil producers, who have emerged as a major threat to the kingdom as the world's preeminent oil producer. If that was indeed the strategy, the IEA report says it won't work.

“Growth in US LTO (Light Tight Oil) is expected to regain momentum in the latter part of the forecast period as prices recover, and North America remains a top source of supply growth for the remainder of the decade,” the report says. “In contrast, Russia faces a perfect storm of lower prices, sanctions and currency swings, pushing its production into contraction. OPEC’s share of global supply will inch up from recent lows but will not recover to the levels enjoyed before the surge in LTO supply.”

In other words, when the dust settles from the recent oil price collapse, the U.S. is likely to emerge in an even stronger position in the world oil market. And since current law forbids most U.S. crude oil from being exported, it is likely to be refined for use in the U.S. market.

"This unusual response to lower prices is just one more example of how shale oil has changed the market," said IEA Executive Director Maria van der Hoeven. "OPEC’s move to let the market re-balance itself is a reflection of that fact. It may have effectively turned LTO into the new swing producer, but it will not drive it out of the market. LTO might in fact come out stronger."

Oil price bottom

Meanwhile, world oil prices have continued to rise this week, suggesting to some market analysts that they have reached a bottom. Still, they remain only half of what they were 6 months ago.

The slight rebound in oil prices has little to do with the rise in gasoline prices consumers may have noticed in the last 10 days. According to the AAA Fuel Gauge Survey, the national average price of self-serve regular is up 12 cents a gallon in the last week.

That's largely due to normal maintenance oil refineries go through at this time of year as they prepare to switch over to producing summer-grade gasoline. Gasoline prices may continue to rise over the next month or so, before leveling off and maybe even dipping a bit in June.

U.S. motorists can expect prices at the pump to rise and fall over the rest of the decade, but price movements should be gradual, not like the volatile flu...

Gasoline prices likely bottomed this week

Refinery maintenance will raise prices over the next couple of months

For weeks now, motorists have enjoyed falling gasoline prices at the pump. In various industry surveys the national average price of self-serve regular is hovering just above $2 a gallon, giving consumers a much-needed break.

But Patrick DeHaan, senior petroleum analyst for the Midwest and southeast at GasBuddy.com, says prices likely hit bottom early this week and will begin drifting higher. Even so, the increase might not be felt everywhere right away.

“There are 3 or 4 states in the Great Lakes region where prices started to move higher this week,” DeHaan told ConsumerAffairs.

Oil and gasoline disparity

Consumers might be puzzled to see their pump prices rise while oil prices have yet to find a bottom, but there's a good reason for that. The price of crude oil is just one, albeit a big, factor in the price of gasoline.

The oil has to be refined into gasoline and here's where the costs can rise. In fact, it happens every year at about this time.

Refineries normally reduce operations while they perform winter maintenance. That reduces capacity and they don't turn out as much gasoline. As a result, supplies tighten and the price goes up.

“Gasoline prices will probably begin to ramp up in early February,” DeHaan said. “Then in March the upward trend will continue.”

A 45 cents-a-gallon increase

As a result, DeHaan says the national average price of gasoline could go up about 45 cents a gallon from its low, even if the price of oil is stable or still falling. And just as in past years, some areas of the country will feel it more than others.

“Parts of California will feel it,” DeHaan said. “Actually, the whole West Coast will likely see a bigger boost in prices since it's pretty much an isolated market.”

In its Fuel Gauge Survey, AAA also noted this week that price declines had begun to slow. While 40 states and Washington, D.C. are registering savings over the past 7 days, drivers in 10 states are paying a bit more at the pump over the same period.

Twenty-two states and Washington, D.C. are still saving a nickel or more a gallon and in 2 states, prices are down by a dime. But those savings are partially offset in the Midwestern states of Indiana, where pump prices have risen by 10 cents and in Michigan, where the price is up a nickel gallon. DeHaan attributes the price bump in the Midwest to “refinery kinks.”

Lower prices in June

While motorists will undoubtedly not like to see pump prices start moving in the other direction, they can take solace in the fact that the increase should be slight and short lived. DeHaan says by June, prices at the pump should be headed down again.

“June is normally the cheapest month for gas,” he said.

The unknown, of course, is the price of crude oil, which will remain a huge influence on gasoline prices. But with crude oil stockpiles rising, no one has yet called a bottom to oil's price decline. This week Barclay's slashed its forecast for prices and said it expects the supply glut to extend into early 2016.

For consumers, that means gasoline prices might be higher than they are now from time to time, but nowhere near where they were over the last 6 years.

For weeks now, motorists have enjoyed falling gasoline prices at the pump. In various industry surveys the national average price of self-serve regular is ...

Feds report growing oil supply

Last week's surge was the largest in 14 years

Forget about oil prices going back up anytime in the near future. The U.S. Energy Information Administration (EIA) reports U.S. petroleum stockpiles surged last week by the largest amount in 14 years.

Oil storage facilities are filled to the brim and companies had to scramble to find places to store the extra 10 million barrels of oil U.S. produced and imported. Total stockpiles reached nearly 397 million barrels, the EIA weekly status report said.

The news sent oil prices plunging once again on world markets, with cheaper U.S. crude approaching $45 a barrel. With so much supply engulfing demand, there is little to propel oil prices higher for the foreseeable future, analysts say.

More important, commodities traders have drastically reduced their positions in the oil market over the last six months, no longer competing with end users of oil – a practice that contributed to oil's lofty heights over the last decade.

More gasoline too

The EIA report also shows gasoline stockpiles rose during the week ending January 16, rising .04% from the week before. That increase should continue to place downward pressure on prices at the pump.

As a result, the national average price of self-serve regular continues to drift toward $2 a gallon. At an average $2.04 a gallon, the price is now $1.24 cheaper than at this time a year ago, according to the AAA Fuel Gauge Survey.

Gasoline prices are now at the lowest level since April 2009 and AAA predicts the national average will fall below $2 a gallon before the end of the month. Some drivers are already paying well below $2 a gallon.

Show Me low prices

For example, the cheapest fuel in the U.S. can be found in Missouri, with an average of $1.76 a gallon. It's followed by Oklahoma, at $1.80 and Kansas at $1.81.

Hawaii's gasoline prices, influenced more by taxes and transportation costs than oil prices, are the only U.S. gasoline prices to remain above $3 a gallon at this point. Alaska is the next most-expensive state, at $2.82 a gallon and New York, at $2.50.

In fact, those 3 states are the only ones where the average price remains above $2.50 a gallon.

If history is any guide consumers could see a 30 to 50 cent increase in prices this spring, as refineries reduce capacity for maintenance and switch over to summer grade gasoline. But AAA sees little likelihood the increase will be lasting.

“These sustained lower prices would be a result of projected shifts in the balance between global oil supply and demand,” AAA said.

And of course, this shift was all started when OPEC decided not to react to rising supplies by cutting production. Instead, it continues to pressure U.S. producers to do the cutting.

Until one side blinks, motorists should continue to enjoy lower prices at the pump.

Forget about oil prices going back up anytime in the near future. The U.S. Energy Information Administration (EIA) reports U.S. petroleum stockpiles surged...

Beyond gasoline, what falling oil prices mean to you

In more ways than one, cheap oil is a big win for consumers

Perhaps nothing better demonstrates the conflict between Main Street and Wall Street than the steep plunge in oil prices over the last 3 months.

Oil prices have gone from over $100 a barrel to below $60. The result has been gasoline prices below $2 gallon in some parts of the U.S. and pump prices well below $3 almost everywhere else.

The immediate benefit for consumers is fairly obvious. Consumers are now saving an average of 80 cents a gallon every time they fill up. That extra money can be used for groceries and other things. Ask consumers what they think about falling oil prices and 99 out of 100 will probably tell you it's the best thing that's happened all year.

Hand-wringing

But ask that question on Wall Street and you get a very different answer. Traders are wringing their hands over the decline in oil prices and the stock market has gone into an end-of-the-year swoon, right at the time that traders were expecting a “Santa Claus rally.”

What gives?

When oil is viewed as a trading commodity, a sharp decline in price can be catastrophic for the parties that own it. It is similar to the dot com implosion of 2000. When the value of an asset plunges, people who own that asset lose money.

Banks at risk

The concern extends beyond oil traders. Banks have loaned money to small oil exploration companies based on the oil they find selling at $100 a barrel. When it's only worth $50 there are real concerns about the risk associated with that debt.

In the financial world, the plunge in oil prices is seen as a big negative, with ripple effects that extend far beyond energy. But what's it mean for consumers?

A big win for consumers

First, it means it costs less to get around. The drop in gasoline prices is like a big tax cut, putting more money in consumers' pockets.

Eventually, consumers will get around to spending that extra money and that will help stimulate the economy. Businesses are also paying less for fuel, allowing them to grow faster than they might otherwise.

This has happened before – 6 years ago. In the wake of the 2008 financial crisis oil prices plunged overnight, falling as low as $30 a barrel at one point. Gasoline prices were below $2 a gallon.

But within months the stock market reached a bottom and surged higher. By June 2009 the economy was growing again, officially ending the Great Recession. Oil prices – and gasoline prices with them – began to rise again.

Lower food costs

In a company podcast, Ron Joelson, executive vice president and chief investment officer at Northwestern Mutual, said U.S. agriculture should be a big beneficiary of low fuel costs, since it's a highly energy-intensive industry. Even food manufacturers and wholesalers should see benefits since transportation costs will be lower.

All of this should translate into lower food costs for consumers – or at least costs that don't go up very much.

With energy costs going down businesses may be more inclined to hire employees. Unemployment is at a relatively low 5.9% but millions of people have dropped out of the labor force, making that number artificially low. Low fuel costs may allow some consumers who have given up to re-enter the workforce.

What consumers perhaps should understand is these low prices probably aren't going to last forever. No one thinks oil prices are going to rebound next month but they probably will rise sooner than most experts think.

So if you were thinking about a small, fuel-efficient car just a few months ago, don't let these low gasoline prices influence you to consider a large SUV instead. If this environment causes dealers to offer a great deal on a hybrid, this is the time to take advantage of it.

Sooner or later, traders will return to the oil market and prices will rise. It happened before and it'll happen again.

Perhaps nothing better demonstrates the conflict between Main Street and Wall Street than the steep plunge in oil prices over the last 3 months....

Merry Christmas: Gas prices are going lower

AAA says they could fall another 20 cents by New Years Eve

The oil price war being waged by Saudi Arabia against U.S. shale producers has resulted in a collapse of fuel prices since the summer. While Wall Street frets over the “bear market” for oil, it has been a bonanza for consumers.

Consider this: nationwide gasoline prices are more than 50 cents a gallon less expensive they they were a year ago. According to AAA, U.S. consumers are saving about $200 million per day on gasoline compared to a year ago.

“Gas prices have fallen at a remarkable pace that would have been unthinkable just a few months ago,” said Avery Ash, AAA spokesman. “Lower gas prices represent real doorbuster savings as everyone begins their holiday shopping.”

Year-long gift

But no one in the industry sees the gift ending with the holidays. It's like consumers are receiving a fruit-of-the-month gift, with each month bringing lower prices at the pump – at least for a year.

The national average price of a gallon of self-serve regular has fallen to about $2.70. By New Years Eve AAA expects the price could fall another 20 cents a gallon because retail gas stations haven't been able to keep up with how fast the wholesale price of fuel has plummeted.

“The holiday joy should continue as gas prices drop even further in the weeks ahead,” Ash said. “We could see prices drop to the lowest levels since the Great Recession if the cost of crude oil continues to set multi-year lows.”

Broken pattern

Over the last few winters oil prices have escalated sharply into the summer driving season – usually blamed on geopolitical unrest somewhere. No one is expecting that to happen this winter. The entire Middle East could go up in flames and as long as the Saudis continued pumping the price of oil would remain near recent historic lows.

Banks and hedge funds that have played the oil commodities market since 2005's Hurricane Katrina have fled the scene, and their absence has pretty much left the market to players that actually use oil. As long as the Saudis continue their pressure on U.S. producers, there is likely to be much less speculation among oil traders.

Additional data from AAA shows just why the Saudis are so concerned about American oil production.

U.S. oil production has increased by more than 70% since 2008 and the America may soon become the world’s largest oil producer. U.S. refiners have been buying U.S. oil instead of OPEC oil and the Saudis have watched with alarm as they have lost market share in the world's most lucrative market.

Long-range forecast

As a result, oil industry experts keep pushing back their forecast for a rise in oil prices. This week Reuters reported its survey of 31 analysts and economists found most expect oil prices to significantly rise no earlier than late next year or early 2016.

The oil experts predict Brent oil – the more expensive crude not produced in the U.S. – will average $82.50 a barrel in 2015. It's currently selling for around $70 but has averaged $102 this year.

Even states like California and New York, where motorists paid more than $4 a gallon at the pump at times this year, are enjoying the gift of lower prices. According to AAA the statewide average in California is $3.04 a gallon and $3.15 in New York.

Meanwhile, here are the 5 states where AAA found the lowest statewide average prices.

  • Missouri ($2.44)
  • Mississippi ($2.51)
  • South Carolina ($2.51)
  • Texas ($2.52)
  • Oklahoma ($2.53)
The oil price war being waged by Saudi Arabia against U.S. shale producers has resulted in a collapse of fuel prices since the summer. While Wall Street fr...