Gasoline prices have inched up over the last week or two to a national average of $2.25/gallon today, yet are still lower than where they started the year. The rebound is thanks to a late-June rise in oil prices in which prices rose 7 of 8 sessions — some $4 per barrel — between June 22 and July 3, pushing wholesale gas prices up, and thus forcing retail gas prices higher.
Note that there was some impressive data showing implied demand of over 22.2 million barrels per day, a number that would represent the highest level recorded in last week’s report from the Energy Information Administration, yet after the report, oil prices began to tank, partially thanks to a resumption in concern about oversupply. Domestic oil production rose 80,000 barrels per day in the report, restoking fears that OPEC isn’t doing enough to reign in a market awash in crude oil.
So while gasoline prices have moved slightly higher, it’s a bit of a head fake, at least for now. The longer OPEC goes without additional cuts, the longer inventories continue to swell and pressure continues mounting. What’s going on with oil lately is like watching the Chicago Cubs struggling recently — all they need is pitching to really see some improvements to their less than stellar half-season. All OPEC needs is to make another production cut, even if it’s small, it’s less about the size and more about showing the world it’s serious.
Until that day comes, motorists will continue to benefit with among the lowest gas prices of the year. And while gas prices are now slightly more expensive than last year, put into the context of the last ten years, prices remain seasonally low.
Several states did adjust their gasoline taxes July 1 and that also weighed on the national average. Without those increases hitting, it’s clear that the national average would be at the lowest of the year.
Moving forward, barring a surprise output cut from OPEC or a major hurricane in the Gulf of Mexico, motorists can expect gas price trends to be variable over the next week or so, but more states should see prices back close to yearly lows by late-July, again, so long as there are no unpredictable surprises. August gasoline prices usually stay low with the exception of a major storm, as the market begins to focus on the move back to cheaper winter gasoline as summer wanes.