Gas prices face upward pressure heading into Memorial Day weekend

Staff Reports • Updated May 25, 2017 at 12:00 PM

Tennessee gas prices held steady during the past week. 

The average price of $2.09 is nearly 3 cents less than this time last year, according to AAA, in which data is collected from credit card swipes and direct feeds from 120,000 gas stations nationwide, in cooperation with OPIS and Wright Express. 

The average price for gasoline in Tennessee increased by fractions of a penny Thursday, snapping a 26-day streak of declines, for a total of 9 cents. 

The most expensive gas price averages in Tennessee were in Nashville at $2.13, Knoxville at $2.11 and Memphis at $2.10. The least expensive gas price averages in Tennessee were in Chattanooga at $2.02 and Johnson City/Kingsport/Bristol at $2.06.

Tennessee gas prices averaged 27 cents less than the national average. Sunday’s national average price of $2.36 was 2 cents more than last week and 8 cents more than a year ago. Tennessee’s average price of $2.09 was 7 cents less than the average last year at $2.16 but 39 cents less than the holiday two years ago at $2.48.

“After declining for almost a full month, the pump price plunge fizzled out in most of Tennessee,” said Mark Jenkins, spokesman for AAA. “Gas prices rose by fractions of a penny during the last few days, primarily due to rising demand and another week of declining crude inventories, which pushed oil prices higher.”

AAA forecasts 37.3 million Americans will travel 50 miles or more for the Memorial Day weekend. About 34.6 million Americans will take a road trip, and 689,692 Tennesseans will take a road trip.

“AAA expects the most-traveled Memorial Day in more than a decade,” Jenkins said. “Pump prices are lower than last year’s holiday, but could face upward pressure by the end of the week, depending on the outcome of an OPEC meeting Thursday. If prices do surge, it is unlikely they would exceed 10 cents by the holiday. Regardless, most Americans have already locked in their holiday plans, and any movement at the pump should not be dramatic enough to convince travelers to stay home.”

OPEC and 11 other countries will meet in Vienna to discuss extending or changing an agreement for cutting crude output in attempt to balance the oil market and raise prices. The existing agreement, set back in November, called for a reduction of 1.8 million barrels per day, which sent oil prices 20 percent higher and gas prices up 20 cents in as many days. 

The IEA released a report last week, which said the world was almost balanced between supply and demand during the first three months of the year. However, the higher oil prices attracted increased production from the U.S., Canada, Libya and Nigeria – which were not a part of the pact – pushing prices back down. OPEC is said to want oil prices at or above $60 per barrel; the highest daily settlements so far this year were $56.34 for Brent crude oil and $54.45 for West Texas Intermediate crude oil in February.

“Last week, oil prices rose when Russia, Saudi Arabia and Kuwait backed a plan to extend the next round of production cuts to nine months instead of six,” Jenkins said. “The futures markets will be very reactive to the rhetoric leading up to the meeting this week, and ultimately the final decision Thursday, which will steer fuel prices this summer.”

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