Growing exports and strong domestic demand will likely apply upward price pressure
BOISE – (March 1, 2018) – A wave of higher gas prices will inundate most of the United States to kick off the spring, the result of steady domestic demand and increased international market pressure. AAA forecasts the national average will be as high as $2.70 per gallon this spring, and if the historical pattern repeats itself, Idaho gas prices could approach $2.85 per gallon or more.
“There’s a growing thirst for oil and gasoline products around the world,” says Matthew Conde, public affairs director for AAA Idaho. “The middle class is rapidly expanding in China and India. OPEC continues its oil production cuts. Latin and South America need U.S. fuel to counter their refinery issues. All of these market forces are making crude oil and gas prices more volatile.”
Today, the national average price for a gallon of gas is $2.53, which is four cents lower than a month ago, but 23 cents higher than a year ago. In the Gem State, a gallon of gas is $2.57, the same as a month ago and 13 cents higher than a year ago. U.S. and Idaho gas prices have been within a nickel of each other for most of the winter, and currently, Idaho ranks 17th for the most expensive pump prices in the country.
In 2017, the United States exported a tremendous amount of crude oil, topping the 10 million barrel/day mark for the first time since the 1970s. That trend is expected to continue, with exports likely to exceed 11 million b/d later this year. Mexico is a hot market at the moment, with additional exports being shipped to the Caribbean, South America, and West Africa. Some experts say that the U.S. Gulf Coast refineries have become the supplier to the world.
This spring, a number of Gulf Coast refineries will go offline to complete deferred maintenance. In an effort last year to avoid further complicating conditions in the wake of Hurricanes Harvey, Irma and Maria, several regional refineries postponed fall maintenance to keep producing needed gas supplies. With spring maintenance season fast approaching and the switch to more-expensive summer-blend fuel close behind, refineries will have to catch up on maintenance, and many U.S. drivers could feel the pinch at the pump that may result.
In the Rockies region, gas prices could be somewhat insulated from international impact, but local demand will certainly be a contributing factor heading into the spring.
“If the spring and summer drive seasons get an early jump in Idaho and in neighboring states, it could definitely apply upward pressure to an already active market,” Conde said. “AAA and others will keep a close watch on oil and gas prices to keep drivers informed.”
Q2 2018 is expected to be the most expensive second quarter for gasoline since 2014.
Since December, the crude oil market has been bumpy. The West Texas Intermediate (WTI) benchmark hit $60/barrel to end the year, and the price has climbed as high as $70/b in early 2018. On Wednesday, WTI traded at $61.55, three dollars less than a month ago and eight dollars more than a year ago.
What can drivers do to reduce pump price pain?
Here are a few ways to conserve fuel:
Slow down. According to the Department of Energy, every 5 mph speed increase over 50 mph is the equivalent of paying an extra $0.18 per gallon.
Participate in carpools and other ridesharing programs.
Ditch unneeded storage items. If your car is lighter, it will get better fuel economy.
Map out your day before you leave the house. “When you combine trips, you’ll save time and lower fuel expenses,” Conde said. “When possible, park in a central location and walk from one errand to the next.”
A new AAA survey shows that 40 percent of drivers would begin modifying their driving behavior when gas prices reach $3 per gallon. While prices aren’t expected to get that high this spring, AAA’s gas-saving tips can help make an upcoming road trip more affordable.
“Travel demand has been very strong, both nationally and regionally, over the past few years,” Conde said. “While no one is happy about paying more for gas, it seems likely that most motorists will tighten the belt in other ways, including their shopping and dining habits, to offset vacation plans this spring.”