US gasoline prices rise near US$3 per gallon ahead of driving season
NEW YORK: Filling the fuel tank for vacation driving this summer will be pricier than it has been in nearly four years for American motorists, as gasoline prices nationwide rise toward the expected average seasonal price of US$3 a gallon.
Lower-income consumers could be most likely to rethink their driving habits as pump prices rise, the American Automobile Association said. Prices ease as the peak summer season ends around September, AAA said, but they could remain at seasonal highs not seen since 2014.
“For consumers who have constrained budgets, they won’t be able to cope with the additional shock to their household budget after a certain point,” said Devin Gladden, a spokesperson for AAA.
This could crimp total US gasoline demand, which has risen for five straight years, even though the current price level does not approach 2008, when the average
For consumers who have constrained budgets, they won’t be able to cope with the additional shock to their household budget after a certain point. Devin Gladden, a spokesperson for AAA
gallon topped US$4.
On the eve of the long Memorial Day holiday weekend that kicks off summer driving season, analysts do not expect gasoline demand to suffer much as of yet.
The US Energy Information Administration expects gasoline consumption to be unchanged in 2018 from 2017 as population and employment growth supports demand, said Tim Hess, a product manager for the EIA’s Short-Term Energy Outlook.
Global benchmark Brent crude oil futures have surged nearly 50 per cent over the last year as demand has risen sharply while production has been restricted by the Organization of the Petroleum Exporting Countries (OPEC) and other major exporters.
This past week, Brent topped US$80 a barrel for the first time since 2014, and the gasoline futures contract on the New York Mercantile Exchange hit its highest since October 2014.
Whether that starts to pinch consumer spending depends on how long prices remain elevated, according to Bank of America/ Merrill Lynch economists.
The investment bank, in a note last week, said a sustained increase in oil to US$80 or US$100 a barrel would have a more pronounced effect on economic growth than a temporary spike.
As of Thursday, the average gasoline price was US$2.961 a gallon nationwide, according to AAA, compared with US$2.367 a year ago. — Reuters