Memorial Day weekend gas prices highest in four years
May 27, 2018 (BE2C2) — Consumer gas prices in the U.S. for the Memorial Day weekend was the highest they’ve been in four years and will likely stay that way through the summer, the U.S. government said.
The three-day holiday weekend in the U.S. (May 26-May 28) marks the de facto start of the summer holiday season ending in September.
According to reports, retail gasoline prices have moved toward a national average of $3 per gallon, a psychological threshold indicative of changing consumer behaviors.
Motor club AAA reported a national average retail price of $2.97 for a gallon of regular unleaded gasoline for Friday. That marks the highest point since Memorial Day weekend 2014, when gas prices were $3.67 per gallon.
“Relatively higher crude oil spot prices, higher gasoline demand, and falling gasoline inventories are all factors contributing to higher gasoline prices,” its report read.
Apart from market factors, refiners produce a different type of gasoline during the summer. It’s more expensive to make than the winter blend.
Also, with oil prices rising after President Donald Trump’s decision on Iran, gas prices are approaching a psychological threshold for most consumers, analysis shows reported UPI.
Retail gasoline prices tend to follow movement in crude oil prices, it said. Since President Trump pulled out of the multilateral Iranian nuclear deal earlier this month, the price for Brent crude oil, the global benchmark for the price of oil, is up more than 5.5 percent.
Patrick DeHaan, the senior petroleum analyst for GasBuddy, told UPI last year that $3 gas might be an economic tipping point. With the U.S. economy on steady ground for now, he said last week that the new threshold might be $4 per gallon, with only minor changes in motorist behavior expected in the current market.
Since Trump took office, retail gasoline prices are up more than 60 percent and that could start to impact consumer spending habits, it said.
Analysis from Danish investment firm Saxo Bank said, however, that the worst-case scenario on consumer pocketbooks hasn’t materialized yet.
Concerns about the fate of the loss of Iranian barrels from an already-tight market and lingering declines from Venezuela have been supportive of crude oil prices for much of the year.
In a statement to UPI, Christopher Dembik, the head of macroanalysis at the bank said , “With a November midterm election looming, the Trump administration will do its best to avoid an unwanted spike in gasoline prices and can count on Saudi Arabia as the Kingdom has recently confirmed its commitment to stable oil prices around the threshold of $80 per barrel.”
Members of the Organization of Petroleum Exporting Countries said they would likely put more barrels on the market in the second half of the year. That’s led to a major drop in crude oil prices on Friday.
The price for Brent crude oil, the global benchmark for the price of oil and the index most closely related to U.S. consumer gasoline prices, was down more than 2 percent in early Friday trading.
Early Monday morning Bloomberg reported that an energy subindex of the MSCI Asia Pacific Index had the biggest decline after a Saudi minister said petroleum supply would likely rise in the second half. Oil slid further below $70 a barrel in New York.
Trading may be subdued round the world by U.S. and U.K. holidays Monday