Consumer gas prices for the holiday weekend will be the highest they’ve been in four years and will likely stay that way through the summer, the U.S. government said.
The three-day Memorial Day weekend in the United States marks the de facto start of the summer holiday season. With crude oil prices flirting with multi-year highs, retail gasoline prices have moved toward a national average of $3 per gallon, a psychological threshold indicative of changing consumer behaviors.
Motor club AAA reports a national average retail price of $2.97 for a gallon of regular unleaded gasoline for Friday. That marks the highest point since Memorial Day weekend 2014, when gas prices were $3.67 per gallon.
EIA said it expects the summer driving season, which lasts through September, will see an average price of $2.90 per gallon, 49 cents higher than summer 2017.
“Relatively higher crude oil spot prices, higher gasoline demand, and falling gasoline inventories are all factors contributing to higher gasoline prices,” its report read.
Apart from market factors, refiners produce a different type of gasoline during the summer. It’s more expensive to make than the winter blend.
Higher oil prices, and the subsequent spike in consumer prices, could be negating the impact of U.S. President Donald Trump’s tax reforms. Fuel prices have increased more than most other consumer goods over the last year.
There may be some relief in sight in the coming weeks as demand tapers off following the long holiday weekend, however. Members of the Organization of Petroleum Exporting Countries said they would likely put more barrels on the market in the second half of the year. That’s led to a major drop in crude oil prices on Friday.
The price for Brent crude oil, the global benchmark for the price of oil and the index most closely related to U.S. consumer gasoline prices, was down more than 2 percent in early Friday trading.
By Daniel J. Graeber