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AAA: Motorists Experiencing 'Sticker Shock' as Gas Pump Prices Rise 12 Cents in Week

Monday, 22 Jul 2013 09:39 AM

 

American motorists are bracing for further increases in gas pump prices this summer after average national prices rose 12 cents in the past week alone.

AAA says drivers are experiencing "sticker shock" as increased summer demand, unrest in Egypt and production disruptions in the U.S. and other countries push up the price of crude oil and gasoline.

The national average price for regular unleaded gasoline was $3.67 a gallon on Friday.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

AAA says that's 23 cents more expensive than the same time last year but still below the all-time daily high of $4.11 a gallon on July 17, 2008.

The association says retail gas prices are likely to rise more in the coming weeks.

Unscheduled refinery shutdowns or hurricanes on the U.S. Gulf Coast could also add to price increases.

Meanwhile, U.S. gasoline prices could hit $4 before Labor Day, as the recent surge in crude oil prices works its way down to the gas pump, Stephen Schork, editor of The Schork Report, an energy newsletter, recently told Newsmax TV.

"It all comes down to crude oil, and crude oil over the last month has risen $13 a barrel," Schork said. "The general rule of thumb is retail gasoline increases 2.5 cents a gallon for every $1 rise in crude oil prices."

That means a 30- to 40-cent rise in gasoline prices prior to Labor Day, Schork says. The national average for regular unleaded gas "could be pushing up toward $4 by the end of this summer driving season," he said.

The good news for consumers is that once gasoline hits $4 or so, it should come back down, Schork says. "Keep in mind … [that] by the end of the summer, refinery demand is starting to ebb on a seasonality basis," he said.

"After Labor Day, there's going to be less discretionary driving, demand will pull back. So this is going to be a short-term rise in price — not fun for the consumer over the next six, seven weeks. But there is a light at the end of the tunnel."

Rising gas prices could put a damper on consumer spending, Schork says. Gas expenditures now account for 4 percent of household income. "If we start to push up that percentage to 4.5 or maybe 5 percent, well, that's an entire percentage point being taken out of spending elsewhere in the economy, . . . probably discretionary consumer goods."

Editor’s Note: Put the World’s Top Financial Minds to Work for You

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