Today’s national average price for a gallon of regular unleaded gasoline is $3.75, which is the highest on record for this calendar day. This price is 15 cents more expensive than one week ago, 44 cents more than one month ago and 19 cents more than the average price one year ago. The 44-cent month-over-month increase is the most dramatic since June 2009. The largest increase on record was August 5-September 4, 2005 when prices jumped 75 cents largely because of Hurricane Katrina.
The national average has increased for 33 consecutive days, rising 46 cents or nearly 14 percent during this stretch. This is the longest streak since the price increased 44 cents over 44 days March 22-May 5, 2011. This year’s run-up is not only larger and faster than recent years but is beginning earlier. The national average in 2011 increased by just seven cents during the same 33 day period and in 2012 it increased by 18 cents.
One reason for the earlier price increase is the trend of U.S. refineries performing seasonal maintenance and making the switch-over to summer blend gasoline production earlier in the year. This earlier schedule is the choice of refiners and has not come in response to any change to the deadline to complete the transition to summer-blend fuels, which are required in many parts of the country and more expensive to produce. Regional supplies can decrease when refineries go offline and subsequently markets are more sensitive during the changeover period to refinery disruptions that would further squeeze supply, as we have seen this year.
In recent years, the price run-up in 2011 began in mid-February, when the national average increased for 27 consecutive days, starting an 86-cent surge to the peak of $3.98 on May 5. In 2012 the surge began at the end of January and increased 66 of 71 days to a peak of $3.94 on April 5 and 6. This year’s run-up began on January 17.
While the peak price this spring may approach the 2011 and 2012 highs, AAA continues to expect the high to be lower than both years. The primary driver of currently rising retail prices has been the aforementioned refinery concerns, however higher crude oil prices have also contributed to a more expensive price at the pump. Unlike recent years, when the price of West Texas Intermediate (WTI) crude oil has approached $110 per barrel, the current early-year increase has been driven by positive economic news rather than geopolitical unrest overseas.
Prices in every state have increased over the last week, led by jumps in Tennessee (22 cents), Arkansas (22 cents), Alabama (21 cents), South Carolina (21 cents) and Mississippi (21 cents). The month-over-month increases are even more dramatic and highlight the tremendous surge in prices since mid-January for many Midwest, central and mountain states (see chart below). The highest prices in the country continue to include Hawaii, California and the Northeast; however the surge in Midwestern prices has catapulted several states in that region back onto the top-ten list.