Consumers are spending $65 more a month to fill-up compared to last summer. According to AAA, gasoline expenses are accounting, on average, for 7 percent of an American’s 2018 annual income, a 1 and a half percent increase since summer of 2017. With strong summer consumer gasoline demand expected in the months ahead, AAA says motorists can expect little relief at the pump with the national gas price average ranging between $2.85 – $3.05 through Labor Day.
“The uptick in gas prices have not historically deterred the demand for travel and taking that summer road trip with the family,” says Bevi Powell, senior vice president of AAA East Central. “Motorists are more likely to shift their spending patterns by skipping a few restaurant meals, bypassing souvenirs or adjusting the length of their stay.”
According to a AAA survey conducted earlier this year, only one in three (33 percent) respondents said they would change travel plans if gas prices hit $3, while nearly half (47 percent) say $3.50 would be the game changer for their summer plans.
Then and Now Price Points: June 2017 vs. June 2018
As vacationers hit the road, they will find a quarter (25 percent) of all gas stations across the country are selling gas for more than $3/gallon. That is a stark difference from one year ago when only 5 percent of stations touted the $3 or more mark. The chart below compares the percentage of stations per state selling gas for $3.01 or more today versus one year ago (percent one year ago/percent today.)
Alabama: 0 percent/0 percent
Alaska: 23 percent/100 percent
Arizona: 1 percent/70 percent
Arkansas: 0 percent/1 percent
California: 53 percent/100 percent
Colorado: 0 percent/13 percent
Connecticut: 0 percent/82 percent
Delaware: 0 percent/1 percent
District of Columbia: 5 percent/36 percent
Florida: 0 percent/4 percent
Georgia: 0 percent/2 percent
Hawaii: 34 percent/100 percent
Idaho: 0 percent/99 percent
Illinois: 0 percent/33 percent
Indiana: 0 percent/5 percent
Iowa: 0 percent/4 percent
Kansas: 0 percent/0 percent
Kentucky: 0 percent/15 percent
Louisiana: 0 percent/1 percent
Maine: 0 percent/12 percent
Maryland: 0 percent/11 percent
Massachusetts: 0 percent/20 percent
Michigan: 0 percent/28 percent
Minnesota: 0 percent/0 percent
Mississippi: 0 percent/0 percent
Missouri: 0 percent/0 percent
Montana: 0 percent/15 percent
Nebraska: 0 percent/11 percent
Nevada: 11 percent/97 percent
New Hampshire: 0 percent/2 percent
New Jersey: 0 percent/26 percent
New Mexico: 0 percent/19 percent
New York: 1 percent/60 percent
North Carolina: 0 percent/1 percent
North Dakota: 0 percent/11 percent
Ohio: 0 percent/0 percent
Oklahoma: 0 percent/1 percent
Oregon: 2 percent/98 percent
Pennsylvania: 0 percent/66 percent
Rhode Island: 0 percent/33 percent
South Carolina: 0 percent/0 percent
South Dakota: 0 percent/18 percent
Tennessee: 0 percent/0 percent
Texas: 0 percent/3 percent
Utah: 1 percent/98 percent
Vermont: 0 percent/4 percent
Virginia: 0 percent/1 percent
Washington: 12 percent/100 percent
West Virginia: 0 percent/1 percent
Wisconsin: 0 percent/4 percent
Wyoming: 0 percent/25 percent
Don’t Let Your Tank Break Your Bank.
For when you are behind the wheel this summer, AAA offers these tips to improve your driving to get better gas mileage:
Observe the speed limit. Not only is it safer, it can help you save m1y.
Lose the weight. The heavier your car, the more fuel it uses.
Accelerate gradually. Avoid jackrabbit starts.
Drive during cooler parts of the day. Cooler, denser air can boost power and mileage.
Maintain recommended tire pressure. Low pressure reduces fuel economy and can damage tires.
Gas prices have shown some positive downward movement at the start of the month, but it is too early to determine if this is a trend. AAA has identified the following outliers that have the ability to drive gas prices – up or down – in the coming months.
OPEC – This year, global demand has outpaced global supply, which has driven the cost of crude oil to near-3 year highs of $72/bbl in May. Since Memorial Day there have been conflicting reports that OPEC – which made a pact with other large producers to cut crude production in 2017 to help drain the then-glut of global supply – may or may not increase production to help ease supply concerns. The speculative news is already having a volatile impact, driving the price of crude down to $64/bbl and up to as high as $65/bbl levels in June. OPEC may announce a decision on increasing supply at its next meeting on June 22 in Vienna, Austria. Should OPEC and its partners increase supply motorists would likely see pump prices decrease late summer. OPEC may announce a decision on increasing supply at their next meeting on June 22 in Vienna, Austria. Should OPEC and its partners increase supply motorists would likely see pump prices decrease late summer.
Hurricanes – Hurricane season is underway (June 1 – November 30). According to the National Oceanic and Atmospheric Administration (NOAA), there is a 75 percent chance of a “near- or above-normal” level of major storms this year. Moreover, NOAA’s forecasters predict a 70 percent chance of 10-16 named storms – of which five to nine could become hurricanes with winds of at least 74 miles per hour. The mere threat of a storm could force oil and gasoline companies, especially along the Gulf Coast, to halt gas operations, potentially leading to spikes in gas prices and limited regional supply.
Exports – Gasoline exports from the U.S. have grown throughout 2018. In fact, the Energy Information Administration’s (EIA’s) final measurement for March 2018 showed that exports hit 951,000 b/d and became the highest March rate on record. This trend is likely to continue throughout the summer, growing closer to 1 million b/d, which could help boost gas prices domestically because of robust demand. More than half of the U.S. gasoline exports go to Mexico, according to EIA.
Demand – According to the EIA’s latest reading for consumer gasoline demand, March 2018 saw nearly 9.45 million b/d, representing the strongest demand measurement for a March on record and a 1 percent increase from last year. AAA expects the high and potentially record-breaking consumer demand trend to continue through the summer, pushing prices higher.
AAA East Central is a not-for-profit association with 80 local offices in Kentucky, New York, Ohio, Pennsylvania and West Virginia serving 2.7 million members. Past news releases are available at news.eastcentral.aaa.com. Follow us on Twitter and Facebook.