Rising crude oil prices and a fall in U.S. supplies are driving wholesale gas prices up sharply. That has yet to be fully reflected at the retail level.
Prices at the pump — up 4 cents the past week to a national average of $3.52 a gallon — could climb another 15 cents or higher over the next two weeks. A year ago, the national average was $3.38.
"It's getting ugly,'' says Patrick DeHaan, senior analyst for GasBuddy.com. "First and foremost, the political problems in Egypt are driving crude oil prices, but there has also been a sharp drop in oil supplies the past two weeks. This is coming at a time when demand is at its annual July peak."
Egypt is not a major oil supplier, but ongoing political woes threaten Middle Eastern shipments and were the catalyst behind crude oil prices rising to 15-month highs earlier this week. Benchmark West Texas crude oil eased 1.5% to $104.91 a barrel Thursday. Wholesale gas prices — up 30 cents to 50 cents a gallon on some markets since late June — rose 0.8% to $3.04 a gallon for mid-August delivery. Typically, pump prices are about 75 cents higher.
Gas prices have gyrated for much of the year, rising from an average of $3.29 a gallon at the start of 2013 to $3.79 a gallon in February, then falling to $3.47 a gallon last week. In some regions of the Midwest, where supplies were disrupted by oil refinery outages and extended maintenance, prices surged to $4.25 a gallon.
The national average for gasoline is now up four consecutive days after falling 24 of the previous 25 days. Midwestern states, including Michigan, Indiana and Ohio, are already experiencing swift, large price hikes, up 16 cents the past week, and could rise another 20 cents by this weekend.
"We may be on a roller coaster for the rest of the summer,'' says DeHaan.
Francisco Blanch, head of commodities and derivatives research at Bank America/Merrill Lynch, says the rise is temporary.
"I don't think the run-up is sustainable,'' Blanch says. "I give it a month."
