Gasoline prices continue to soar, and the upward trend is not expected to slow down anytime soon, AAA Auto Club South predicts.
“Motorists need to prepare themselves for increased pump prices,” said Jessica Brady, a Tampa-based AAA spokeswoman. “We’re likely to see a lot more volatility in the market as peak hurricane season approaches.”
On Monday, the Florida average for a gallon of regular gasoline stood at $3.62, up 8 cents from a week ago and 11 cents from a month ago. This time last year, the state average was $3.39, according to AAA’s Fuel Gauge report.
Palm Beach County’s average reached $3.72 a gallon Monday, up 6 cents from a week ago, and 8 cents from a month ago. A year ago, the average price per gallon was $3.52.
But prices are nothing like the all-time highs on July 17, 2008, when the national average was $4.11 a gallon, and Palm Beach County’s was $4.18.
Decreases in oil inventories, tensions in the Middle East and a jump in fuel demand pushed the price of crude oil to a 16-month high last week, AAA said. Its price closed Monday at $106.91 per barrel.
“Crude oil has risen by more than $11 a barrel in the month of July alone, and increased 18 percent in 2013,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Crude oil inventories hit an all-time high at 397.6 million barrels May 24. Since then, we have seen supplies fall by 30.6 million barrels.”
Tom Kloza, chief oil analyst at the Wall, N.J.-based website GasBuddy.com, Wall, N.J., agreed that crude oil prices are to blame for the run-up. Each $1 gain per barrel adds 2.4 cents or so per gallon to the cost of gasoline.
It could be worse. Gasoline production at Gulf Coast refineries, where most of Florida’s supply comes from, is at an all-time record level, Kloza said.
“This is good news for the most part, but, yes, it does mean that a hurricane in the Caribbean or Gulf of Mexico could have more impact this year than in most,” Kloza said.
Kloza said he expects gasoline demand to be flat, or slightly below 2012 levels as the year progresses.
“We have an aging population — folks over 55 who drive less — and the younger driving segment is less mobile than in previous years,” Kloza said.
Another factor is that more gasoline is being sent to foreign countries, Flynn said. Due to government mandates that ethanol be added to gasoline sold in the United States., some refineries are choosing to sell gasoline to other countries instead.
Flynn said the refinery industry is experiencing growing pains, but it’s expanding, and that in the long run, gasoline prices will be lower.
While Flynn thinks this summer’s gas prices may be topping out, the wild cards — as always — are hurricane season and the Middle East.
“You have a lot of moving parts here right now, and hopefully if some of these moving parts start to calm down, you should see prices start to come down again,” Flynn said.
The Associated Press contributed to this story.
Palm Beach County’s average regular gas price
A week ago $3.66
A month ago $3.64
A year ago $3.52.