RISING GAS PRICES FUEL WORRY
Nearing $3 a gallon, peak still hasn’t been hit
A tank of regular is leaving a premium hurt on drivers’ wallets.
The price of gasoline in Massachusetts is soaring, striking $2.93 a gallon for regular, same as the national average, according to AAA and GasBuddy tracking.
The 8 percent bump from last month’s average of $2.71 a gallon — and a whopping 25 percent increase from last year — is threatening a return to sky-high prices as the summer driving season ramps up.
“We will see prices continue to climb through Memorial Day weekend and into summer,” said Mary McGuire of AAA Northeast.
The upward climb drivers have noticed in recent weeks — stoked in part by tensions with Iran, which boasts the world’s fourth largest oil reserves, and Venezuela, with the largest oil reserves — is far from peaking.
“The fact we still have a ways to go before we hit $3 a gallon is a positive, but I certainly think it looks we will hit it this summer,” McGuire said.
Twelve states currently have broken the $3 a gallon mark, including New York, Connecticut and Pennsylvania, according to GasBuddy.
In New York City, a Mobil station on 11th Avenue in Hell’s Kitchen is testing the upper limit for gas prices, with a gallon of regular going for $4.99.
“It’s pretty slow,” a clerk answering the phone at the station said, confirming the price was still a whisker from the $5 mark.
Gasoline price escalations caught many by surprise. The Department of Energy boosted its short-term forecast for national gasoline prices by 15 cents a gallon.
“What’s for sure is we will be paying more than we expected a few months ago,” said Patrick DeHaan, a senior petroleum analyst with GasBuddy.
Of the many swirling factors causing prices to increase — from the growing economy to drivers buying less efficient vehicles — Saudi Arabia and OPEC are the biggest factors to watch, DeHaan said.
The 14-nation Organization of the Petroleum Exporting Countries cut production in November 2016 to raise prices after a failed bet that low prices would starve the booming U.S. shale industry. The glut of oil from the market resting at $25 to $35 a barrel started to run low, and now the high demand for oil is taking its toll. Crude oil is currently topping $72 a barrel.
With healthy crude prices, OPEC could move to boost production when it meets in June — a move that would cut prices in the U.S. DeHaan said Saudi Arabia, which saw business head to the U.S. when prices were low, is “itching to get its market share back.”
President Trump’s move to end the Iran deal and slap the country with sanctions has itself boosted prices by a couple cents — but the real worry would be if the world follows suit, DeHaan said.
“If that happens, that will effectively stifle Iran’s ability to sell to the global market,” he said, leaving one fewer reliable crude oil source.
In addition, the Trump administration’s economic sanctions against Venezuela are having an effect on prices as well.