It appears that the beach isn’t the only place U.S. consumers stand to get burned this summer: look at out for “sticker shock” when you fill up the gas tank in the convertible on your way to the boardwalk.
Meanwhile, tight gasoline supplies on the U.S. East and West Coasts have left both regions vulnerable to potential price spikes at the pump ahead of the peak summer driving season, Reuters explained.
Supplies on both coasts are at seasonal five-year lows as the Memorial Day holiday weekend starts, the unofficial beginning of summer.
The Memorial Day weekend is expected to post the second-highest travel volume on record since the American Automobile Association (AAA) began tracking the volumes in 2000, it said.
A former oil executive warned Fox Business Network that U.S. gasoline prices are expected to top $3 on average and soar even higher in some parts of the country by the Fourth of July.
“I think we are headed to over $3 for sure between now and July 4,” former Shell Oil president John Hofmeister told Fox Business Network.
The current national average for gas is $2.85 a gallon, according to AAA Gas Prices.
“I think in the heart land of the nation where today it’s still around 2.70, I think they are going to be getting close to $3,” Hofmeister said.
The national average climbed 67 cents a gallon between New Year’s Day and May 4, when pump prices peaked, according to price-tracking firm GasBuddy. That’s the second-biggest rise on record for the start of a year, trailing only the 93 cents per gallon surge in 2011, CNBC explained.
California drivers are still paying $4 a gallon, while Americans in neighboring Western states are paying more than $3 a gallon.
“While the rise in prices has been steep this spring, perhaps the most important factor is that in many places, gas prices are still well below their all-time highs and perhaps even more importantly, over 50% of the nation’s gas stations are selling at $2.99 per gallon or less,” Patrick DeHaan, head of petroleum analysis GasBuddy, said in a news release.
Nearly 75% of Americans plan to take a road trip this summer, marking an increase from last year, according to a survey by GasBuddy. However, 38% of survey respondents — roughly the same as last year — said current gas prices will impact their travel decisions.
The West Coast’s supplies tightened earlier this year due to a combination of refining maintenance, unexpected outages and a falloff in ethanol supplies needed to blend into the gasoline pool due to flooding in the Midwest.
Market participants have been sending supplies there instead of elsewhere as prices rose. California currently is posting the highest prices in the country, at an average of $4.054 per gallon, according to AAA. The state’s prices have been at their highest seasonally since 2014.
West Coast gasoline imports in April were up 62% from the same time last year, according to Matt Smith, director of commodity research at ClipperData.
That sapped cargoes from the East Coast, which has had its own refinery maintenance, traders said. Atlantic Coast imports in April were down 7% from last year, Smith said. Imports there have improved in May and so far are up 14% year-on-year.
On the demand side, the Memorial Day weekend is expected to post the second-highest travel volume on record since the American Automobile Association (AAA) began tracking the volumes in 2000, it said.
“Both regions will struggle to rebuild stocks in time to meet peak demand,” Energy Aspects said in a note. “At this point, the market will need to run to stand still, leaving it vulnerable to any additional refinery outages.”
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