Gas prices jump higher as Memorial Day weekend nears
01/01/2014 6:30 AM
08/06/2014 9:20 AM
Memorial Day weekend is two weeks away, but gas prices already have soared locally.
The average price for regular unleaded gas in Wichita on Monday was $3.60 a gallon, up 17 cents from a week ago, up 20 cents from last month, and 41 cents higher than six months ago, according to the auto club AAA The national average on Monday was $3.57, an increase of 5 cents over last week.
Last year at this time, regular unleaded around Wichita averaged $3.48 per gallon.
“Supply and demand hasn’t dictated this,” said Darin Newsom, a senior market analyst for the Omaha-based Internet trading firm Telvent DTN. “This looks more like preparation for summer, anticipating that the demand is going to pick up.”
There is a normal tendency for prices to rise around Memorial Day, he said.
“But in this case there is not a fundamental reason to have prices go higher,” Newsom said.
Supplies of crude oil and gasoline are plentiful, and demand has been fairly anemic, so the increase is a bit surprising to him.
“It looks like we’re trying to push the market higher to see how the market reacts,” Newsom said.
James Hanni, AAA’s public affairs executive vice president in the Kansas region, offered a number of possible reasons for the sudden price hike. He pointed to the rise in crude oil prices in the last week and the conflict in Syria.
Also, he said, refineries are switching from winter to summer fuel blends that require more additives designed to protect the ozone during hotter months. The transition raises production costs and limits output, sending prices higher.
“It finally caught up with us over the weekend,” Hanni said.
The average cost of a gallon of regular unleaded gas around Kansas was $3.61 Monday morning up from $3.42 last week. The average in Topeka was $3.65, and in Kansas City, $3.66.
The steep rise over the last week is expected to trail off, as it did in 2011 and 2012 at about the same time, Hanni said. The auto club continues to expect national gas prices for the year to be lower than last year, he said. AAA forecast in January that prices would peak at $3.60 to $3.80 per gallon compared with 2012’s $3.94 per gallon.
“The silver lining in this is that we shouldn’t see this keep going up and up and up,” Hanni said. “There should be some downturn at some point.”
Newsom said that there could be some rise in gas prices if summer demand picks up.
“But,” he said, “I think we’re doing most of our rally in front of Memorial Day, so I don’t know that we’ll go higher.”