Gasoline demand is surging while inventories are beginning to slip. Meanwhile, refineries are getting rid of excess winter-blend gasoline as they continue to push summer blend fuel into the market, which is more expensive to produce.
On Sunday, the national average for a gallon of regular unleaded gasoline was $2.32, an increase of 3 cents from last week, up a few fractions of a cent from one month ago, and 26 cents more than this time last year.
“Motorists should expect more volatility at the pump in the coming months,” said Josh Carrasco, spokesman for AAA. “Declining gasoline inventories, like we saw last week, normally trigger a rise in gas prices. But increased domestic oil production could put a ceiling on historic springtime increases at the pump.”
Wholesale gas prices rose 7 cents last week as demand rose and gasoline supplies fell. The dip in supplies is normal for this time of year, as refineries try to sell off their remaining winter blend gasoline. Refineries have until May 1 to complete the switch to summer blend gasoline. AAA projects the national average for a gallon of gasoline will increase 40 cents this summer, peaking near $2.70, which is 70 cents higher than it was last summer. Whether gas prices reach that peak will depend on the direction of oil prices, which hit their highest price point Friday since March 7.
U.S. crude inventories increased 0.9 million barrels last week. At 534.0 million barrels, supplies remain well above the upper limit of the average range for this time of year.
Domestic crude production increased 0.20 percent to 9.15 million barrels a day – the highest level since February 2016.
Gasoline demand has surged by 3.5 percent. Demand is 3 percent higher than this time last year.
Gasoline inventories in the Gulf Coast declined from 80.0 to 78.5 million barrels. Nationwide, the number declined by 4 million barrels. Declining inventories can signal rising gas prices.
Gasoline production increased nearly 3 percent at Gulf Coast refineries.
Refineries operated at 89 percent capacity – an increase of three percentage points. This is a signal that refineries are nearing the end of maintenance season.
Wholesale gasoline prices rose 8 cents last week.
Crude oil prices climbed above $50 a barrel last week for the first time in three weeks. The price for West Texas Intermediate crude oil averaged $49.31 last week – an increase of $1.46 from the week before. Friday’s daily settlement of $50.60 was the highest since March 7.
Tennessee gas prices averaged $2.07 on Sunday – 3 cents more than last week, 1 cent less than a month ago, but 16 cents more than a year ago.
The most expensive metro markets in the state were Memphis at $2.106, Nashville at $2.097 and Johnson City-Kingsport-Bristol at $2.049. The least expensive metro markets in the state were Chattanooga at $2.011, Knoxville at $2.018 and Clarksville-Hopkinsville at $2.028.
Florida gas prices averaged $2.30 on Sunday – fractions of a cent more than a week ago, 1 cent more than a month ago, and 23 cents more than a year ago.
Georgia gas prices averaged $2.20 on Sunday – 4 cents more than a week ago, 2 cents less than one month ago, and 16 cents more than a year ago.