Gasoline prices rose for the second consecutive week as crude oil prices faced upward pressure from supply cuts and increased demand.
Prices for crude oil, the key component of gasoline, have increased for three consecutive weeks, although the fell some on April 10.
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The average price for a gallon of gasoline rose by 8.8 cents compared to a week ago, according to GasBuddy data compiled from over 150,000 gas stations. Nationwide, gasoline averaged $3.57 per gallon on April 9.
Gasoline prices are still cheaper than a year ago when motorists were paying 52.6 cents more per gallon.
“The national average price of gasoline has continued its relatively slow climb, with 44 states seeing average gasoline prices climb over the last week," said Patrick De Haan, head of petroleum analysis, GasBuddy, a Boston-based provider of retail fuel pricing information and data.
The decision by OPEC to curtail supply also played a factor.
"Prices are being pulled up not only due to continued increases in demand as temperatures warm, but also pressure from oil prices, which have risen over 20% in the last month, primarily driven by OPEC’s surprise decision a week ago to cut oil production,” he said.
The national average price of diesel dipped by 1.6 cents during the last week and consumers are paying $4.15 per gallon, which is 88.9 cents lower than one year ago.
Refiners are currently switching to summer gasoline blends and conducting annual scheduled refinery maintenance, which are factors causing the spike in prices, De Haan said.
“Expect the upward trend to continue through much of the rest of spring, but once the transition to summer gasoline and refinery maintenance are behind us, April and May jumps could bring June slumps," he said. "However, for diesel, the news continues to be good, with the national average price of diesel continuing to drop, now at its narrowest difference to gasoline in over 13 months.”
Consumer expectations of higher gasoline prices has started to wane. The median expected price changes for the year ahead fell by 0.1 percentage point for gas (to 4.6%), according to the March 2023 Survey of Consumer Expectations that was released on April 10 by the Federal Reserve Bank of New York’s Center for Microeconomic Data.
The NY Fed's report demonstrated that consumers are expecting more price increases due to inflation for both the short-term and medium-term, but they fell slightly at the longer-term horizon.
Consumer expectations about price increases for food, gas, rent and healthcare expenses continued to decline for the upcoming year, while they expect the cost of college education to increase.
Prices for homes are also expected to rise, but are below the levels before the pandemic occurred.
Oil Prices Climbing to $80
The decision by OPEC+ to slash production by 1.15 million barrel per day pushed crude oil prices up by 20%.
Crude oil ramped up from a low of $65 per barrel to trade at over $80 last week.
The rebound in global oil demand has been slower than expected, especially in China.
"China’s economic gains have been slower than anticipated, also helping to stifle recent sentiment of a stronger rebound in global oil demand," De Haan said. "However, with temperatures beginning to warm in the U.S., boosting demand, and refineries finishing seasonal maintenance, oil demand is likely to start accelerating, and further gains are certainly possible in the weeks ahead."
