Seasonal increase in retail gasoline prices could be delayed

Seasonal increase in retail gasoline prices could be delayed

Feb. 27 (UPI) — The expected seasonal uptick in the retail price of gasoline could be delayed due to recent signs that inflation remains entrenched in the U.S. economy, a Chicago-based market analyst said.

Travel club AAA listed a national average retail price of $3.36 for a gallon of regular unleaded gasoline, unchanged from Friday and about 15 cents lower than this time last month.

Crude oil prices account for the bulk of what consumers pay at the pump, alongside state taxes. After peaking near $87 per barrel in late January, the price for Brent crude oil, the global benchmark for the price of oil, has been stuck around $83 per barrel.

A steady string of severe winter weather, meanwhile, is curbing travel demand, helping to create further headwinds for the price at the pump.

Prices in the weeks leading up to spring, however, tend to increase due to a switch to a costlier summer-blend of gasoline and a regular season of refinery maintenance.

“For the weeks ahead, tradition tells us to expect prices to move up eventually, but that could be at least be partially offset by inflationary data that continues to be hotter than expected, leading to anxiety that the Fed will boost interest rates and cooling the economy and oil demand considerably,” Patrick DeHaan, the head of petroleum analyst at GasBuddy, said Monday.

So-called core consumer inflation, which strips out the more volatile prices of energy and food, increased by 0.1% from December levels to 6.5% last month, sharply lower than summer levels near 9%, but far below the 2% target rate for policy makers at the U.S. Federal Reserve.

That could incentivize policy makers at the Fed to hike interest rates again, which could curb consumer demand and keep a lid over both crude oil and gasoline prices.

“The national average has resumed its decline after a pause last week as oil and wholesale gasoline prices fell on worrisome inflation figures showing the Fed likely to ramp up rates to slow inflation,” DeHaan added.

A spike toward $4 per gallon is certainly possible by the summer, though it’s unlikely that consumer-level prices at the pump will hit the highs that came as a result of the Ukrainian war premium last year.

The federal government is forecasting an average yearly price of $3.39 per gallon, down from the $3.97 average for 2022.

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