Gas Prices Officially At Levels Not Seen Since July 2013
The average price of a gallon of gas jumped a nickel per gallon over the past week, according to the latest survey from the U.S. Energy Information Administration. The latest EIA survey shows the a gallon of unleaded is now $3.65 at the national level, a surprising leap even amid the backdrop of rising crude oil prices and tighter crude inventories in the United States.
For drivers on the West Coast of the United States, the news is even more grim, with the cost of a gallon of gas jumping nearly 10¢ per gallon over the past week. While the official cost of fuel in all regions is still under the critical $4.00 threshold, the actual price that many consumers are paying is already in excess of that dubious benchmark, particularly in California.
Regional Prices Do Not Tell The Local Story
While prices average out at certain regional levels, locally, drivers typically pay much higher prices. This is especially true in urban areas. For instance, on the West Coast, the EIA survey shows gas prices are $3.98 per gallon. However, drivers in Los Angeles are paying an average of $4.28 per gallon for gas, and the retail price in San Francisco now averages $4.14.
In Chicago, the cost of a gallon of gas is now $4.07, even though the regional price point is much lower, at $3.63 per gallon across the balance of the Midwest.
The same is true in Florida, part of the lower Atlantic Region, where the average per gallon price is $3.60, below the national average. However, the average price of regular unleaded in $3.87 in Miami. In Fort Lauderdale, some stations are charging even more.
That trend does not always hold true, however. In Texas, which is part of the Gulf Region, the average price of fuel is about $3.47, but there are many stations charging less. In some suburbs of Austin, the price is as low as $3.35 per gallon, which is likely a relief for drivers who commute between towns like Round Rock, Georgetown, Pflugerville and the heart of Austin, itself.
Crude Prices Remain High, But Relief May Be Coming
Domestic crude oil prices remained well above $100 per barrel over the past week. Current trades of West Texas Intermediate (WTI) are for May delivery, and it is possible the current retail price surges are due, in part, to anticipation of the increased costs retailers will have to pay for refined fuels. Energy companies are already refining their fuel for summer blends of gas, which are typically more expensive, but the added pressure from the futures markets has likely exacerbated the situation.
However, Bloomberg was reporting at midday Tuesday that U.S. domestic crude supplies may have grown during the past week. That helped bring WTI down from its five-month highs. Renewed oil production and shipments from Libya have also helped ease futures prices. Even so, WTI is more than $10 per barrel higher than it was just after Thanksgiving 2013, after closing over $104 per barrel Monday. Prices were trading around $103.80 early Tuesday afternoon.
However, escalating tensions in Ukraine sparked renewed fears this week that there could be energy supply disruptions in Europe. Military clashes in the east have sparked fears of a potential showdown with Russia and Ukrainian separatists who wish to join Russia. Bloomberg.com quoted John Kilduff, a partner at New York’s Again Capital LLC, as saying there are elements in place that could push WTI lower, but upward pressure remains on Brent. Again Capital is a hedge-fund that focuses on energy.
“Prices are elevated due to geopolitical risks,” Kilduff said. Kilduff told Bloomberg the Ukrainian tensions could keep Brent elevated, though he was not quoted as saying that could have a ricochet effect on WTI.