CARS.COM — U.S. motorists are driving more and boosting demand for gasoline, so pump prices are likely to increase in the near term — but analysts remain optimistic that gas this summer will be cheaper than it has been in more than a decade. The national average for a gallon of regular gas inched up a penny the past week to $2.11, according to the AAA Daily Fuel Gauge Report, and higher prices could be just around the corner if oil prices climb.
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Oil prices have been volatile recently. U.S. crude was trading at $40 a barrel on Monday but jumped up to $44 early Thursday on speculation that oil-producing countries will soon cut production. Prices then fell back down again. Oil historically has been the biggest factor in gasoline prices because it accounts for more than half the cost (refining and distribution costs, along with taxes, account for the rest).
GasBuddy.com analyst Dan McTeague argues that global demand for gasoline is rising so much that the pendulum is swinging the other way: Demand for gas is driving the price of oil.
"With so many factors influencing the price we pay at the pumps, it looks like gasoline has supplanted oil and unlike the recent past, gasoline economics are influencing oil prices, not the other way around," McTeague wrote in a blog post.
AAA said the U.S. Energy Information Administration estimates that gas consumption this spring is approaching levels typically seen only during the summer, the peak driving season.
"Prices may move higher during the second quarter of the year in select regional markets due to intermittent supply challenges and increased demand for gasoline," AAA said in a statement. "This increase in driving may put pressure on local gasoline markets and cause prices to move higher if demand outpaces the available supply of gasoline.
"However, consumers remain poised to benefit from substantial comparative savings as we enter the busy summer driving season, and it is likely that most drivers will pay the cheapest summertime prices in 12 years."
The EIA said last week it expects summer gas prices to average $2.04, the lowest since 2004. Pump prices already are considerably lower than a year ago. AAA said the average price for regular is 35 cents cheaper than a year ago, and at $2.58 premium gas is 27 cents cheaper. Diesel fuel is a bigger bargain, with the national average of $2.12 lower by 67 cents compared with April 21, 2015.
The lowest gas prices were in the South. AAA said regular averaged $1.89 in Mississippi and South Carolina, and $1.90 in Arkansas, Louisiana and Texas. California had the most expensive gas, with regular averaging $2.77. The average for regular was $2.61 in Hawaii, $2.45 in Nevada and $2.33 in Alaska.
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