June 19 (UPI) — U.S. consumer fuel prices are moving lower alongside declines in the price for oil, but will likely stay high by relative terms for the summer, analysts said.
Motor club AAA reports a national average retail price of $2.89 for a gallon of regular unleaded gasoline for Tuesday, about a penny less than Monday. Across the country, only a handful of states saw the price at the pump increase from last week.
The price for Brent crude oil, the global benchmark and the index that usually drives the price of gasoline, is down about 1.5 percent from last week. Crude oil prices are moving lower because traders expect the Organization of Petroleum Exporting Countries to decide to put more oil on the market after a meeting later this week.
Consumer demand, however, is draining the domestic inventory for gasoline. AAA’s latest weekly market report said gasoline inventories, despite prices being 60 cents more per gallon than this time last year, are 5.7 million barrels below what they were a year ago.
“If demand continues to strengthen and inventories decrease in the weeks ahead, motorists can expect gas prices do a reversal and start to increase again,” AAA spokeswoman Jeanette Casselano said in a statement. “AAA expects the national gas price average to range between $2.85 and $3.05 [per gallon] through Labor Day, likely seeing the summer’s highest prices in June.”
By region, the West Coast is the most expensive market in the country, with Arizona setting the low-tide mark at $3.07 per gallon. Gasoline inventories are growing in that region, but maintenance issues at a Shell refinery in California are supporting higher gas prices.
The Great Lakes market, meanwhile, is the most volatile in the country. Ohio topped the national list with a 10 cent drop in gas prices, while Indiana drivers saw the price at the pump increase by 5 cents. With summer demand levels high, gasoline inventory levels increased only slightly.
Patrick DeHaan, the lead petroleum analyst at GasBuddy, said there may be other factors apart from demand that could drive the price of oil and retail gasoline higher.
“We see gas prices falling slightly into late June or early July before odds rise of hurricane season leading to some volatility at the pump, which could lead prices higher short term,” he said in a separate statement.
The southern U.S. refinery sector was battered last year by a series of hurricanes in the Gulf of Mexico. Many of the gas stations in Florida went dry after Hurricane Irma hit the state in early September. Florida lacks the refinery capacity to make its own gasoline.