SUMMER DIP AT PUMP DOUBTFUL
Gas prices seen rising as demand stays high
If you think gas prices are too high right now, don’t hold your breath for relief. Spiking oil prices could mean higher prices at the pump through the end of the summer, a time when gas prices tend to fall, experts said.
“The prices we’re paying now will remain and will potentially go up in the second half of summer,” said Dan McTeague, an oil analyst with GasBuddy. com. “This is the new normal.”
Yesterday, crude oil futures hit $75 a barrel, a mark that had not been reached since 2014. Oil closed up 0.23 percent, at just over $74 per barrel.
“The reality continues to be one where there is fundamentally an increase in demand and a decrease in output,” McTeague said. “The fact that it’s holding at that level suggests we’re going to have an expensive summer.”
In a typical year, gas prices tend to peak around early July, slowly tapering off through the summer. But this year, supply and demand difficulties will likely mean level or higher prices for the near future, even without any unforeseen circumstances, like a particularly impactful hurricane.
Among a smorgasbord of global events, new U.S. restrictions on Iranian oil have helped push oil prices up in recent months. Yesterday, concerns over domestic stockpiles and Saudi Arabian production powered the market moves.
The average gas price in Massachusetts is $2.84 per gallon, according to AAA New England. That is 66 cents per gallon higher than this time last year, AAA said. Still, gas prices have actually fallen since Memorial Day, said Mary Maguire of AAA New England.
“This week our AAA survey actually revealed gas prices for regular unleaded were down 3 cents to $2.84,” she said. “Gas prices … do not seem to be deterring drivers.”
Maguire said prices at the pump are unlikely to change driver behavior unless they rise above $3 per gallon, which could prompt a mental switch that gas is significantly more expensive.
AAA is forecasting record travel for the Fourth of July, fueled by a combination of a healthy economy, warm weather and gas prices that feel reasonable compared to earlier this year.
“All of those things combine to prompt people to head out on the road,” Maguire said.
AAA predicts 1.25 million Massachusetts residents will travel for the holiday, with 1.1 million of those hopping in the car.