Surging wholesale gasoline prices should push pump prices to an 18-month high and put drivers on the cusp of having to pay $3 per gallon for gasoline. Wholesale prices jumped 5 cents Friday and that should mean retail prices of at least $2.87 per gallon in the next couple of days, the highest level since October 2008, said Tom Kloza of Oil Price Information Service.
Oil prices have doubled in the past year as various economic indicators and a surging stock market suggest the Great Recession is over and that energy consumption will improve, especially in emerging markets such as China and Latin America.
Gasoline prices tend to move higher with oil prices. Also in the spring gasoline demand typically picks up and more expensive blends are produced to meet anti-pollution requirements. The Energy Department and a number of analysts expect average retail gasoline prices to top $3 a gallon by summer.
Pump prices have been mostly flat for the past week. The nationwide average was $2.854 per gallon on Monday, according to AAA, Wright Express and Oil Price Information Service. Prices have risen 4.8 cents over the past month and are 80.2 cents higher than a year ago.
The government’s Energy Information Administration will release its weekly price survey later Monday.
Though it may not seem like it, drivers actually have been getting a break at the gas pump. Oil prices of $80 a barrel, about the average cost for crude so far this year, typically mean a pump price of about $2.90 per gallon, said oil analyst and trader Stephen Schork.
With crude prices currently at $85, “I can’t see how we don’t get to $3 on a national average,” he said.
The reason it has not so far is because demand for gasoline continues to be weak, he said.
Oil prices eased on Monday after jumping Friday. Benchmark crude for May delivery fell 94 cents to $84.18 a barrel on the New York Mercantile Exchange. Earlier in the session, it rose as high as $85.63.
In other Nymex trading in May contracts, heating oil fell 1.41 cents to $2.2364 a gallon, and gasoline dropped 1.41 cents to $2.3390 a gallon. Natural gas lost 2.9 cents to $4.228 per 1,000 cubic feet.
In London, Brent crude gave up 61 cents at $86.64 on the ICE futures exchange.