If I walk two blocks south of my current location in central Phoenix, the average price for regular gasoline at the local Chevron is $2.79 for cash customers, and $2.89 for those paying with a debit or credit card. However, two blocks to the north, I can find gas at Costco for $2.51 per gallon. With a 28 ₵ difference for the cash price and 38 ₵ difference for debit/credit purchases, Costco is definitely the winner today.
For sure, gasoline prices are on the rise and have risen steadily over the past month. However, they are about $1 less than they were a year ago and no one I know is complaining about that.
Using data from GasBuddy.com, here’s a summary of regular (87 octane) gasoline prices over the last 12 months:
One Week Ago $2.591
One Month Ago $2.383
One Year Ago $3.670
What’s driving some of the increase at the pump? Most analysts cite a drop in the U.S. oil inventory for the first time in four months. A supply glut of oil led to cheap gasoline and even some layoffs in the energy sector, however, this may be ending – for now.
According to the Fort Worth Star-Telegram [Ref 1], “The price of West Texas Intermediate oil, which sets the U.S. benchmark, has risen nearly 40 percent since late March to $61.32 a barrel Wednesday, a significant turnaround but still far below last summer’s price of $107.52.
The price has a huge impact on the economy. The increase helped drive the cost of gasoline up 23 cents per gallon in the past three weeks, according to AAA. But low oil prices are bad for states that depend on oil taxes for revenue, and they pose a threat to the U.S. shale-drilling boom.”
Expect prices to continue to tick upward as U.S. motorists enter the summer driving season that traditionally begins the Memorial Day Weekend . International factors that may also be impacting U.S. gas prices include instability in Libya and Yemen that have led to the closure of one or more ports for oil shipment. However, Saudia Arabia and other Organization of Petroleum Exporting Countries (OPEC) are not expected to make any changes to their production levels when the group meets in Vienna in June.
The only unknown in this equation is whether U.S. drillers will increase their output this summer.
- Oil Inventory Decline May Raise Gas Prices, Sean Cockerham McClatchy Washington Bureau, Fort Worth Star-Telegram, Business Section, http://www.star-telegram.com/news/business/article20385183.html, May 6, 2015.