After eight months of drivers’ delight in the form of steadily dropping gas prices, the numbers at the pump have started going in the other direction and are expected to keep rising until the summer.
The average price in the Dayton region was $2.32 on Friday, up from just under $1.93 a gallon a month ago. But it’s still way below the $3.34 average per gallon of one year ago. In fact, gas prices last spring crested at $4.10 a gallon before starting a long, steady slide.
“We think the national peak for gas will about $3 a gallon,” said Gregg Laskoski, senior petroleum analyst for GasBuddy, which tracks data on prices in the Miami Valley.
Several factors took the air out of prices. The reduced demand for oil in Europe and China, increased oil production from hydraulic fracturing, and other new technologies that allow refineries to more efficiently produce fuels from difficult-to-refine tar-sands have contributed to the strong supply worldwide, Thomas Traynor, chairman of the economics department at Wright State University, said Friday.
The low prices had a ripple effect on the economy. Traynor said lower gasoline prices put dollars in U.S. consumers’ wallets, leading to increased demand for most other goods.
“This increased economic activity has been one of the factors behind increased consumer confidence as well as the increased economic growth rates and employment levels of the past two quarters,” Traynor said.
The equation started to change at the end of January: prices started going back up. American demand picked up, but production did not. That raised the price of oil, which typically accounts for most of the cost of gasoline.
Also pushing up prices: Refineries shut for maintenance and to switch over to production of the more expensive, lower-pollution gasoline used in the summer.
Rising fuel prices can crimp spending. Roughly 35 percent of people who stop for gas also go into the convenience store, about one-third of them buying at least a snack, according to the National Association of Convenience Stores. When prices are high, purchases at those stores go down.
But prices are only edging up, said Brian Milne, energy editor for Schneider Electric, a French-based global energy management company: Futures market traders are pricing gasoline for June delivery at about 30 cents a gallon more than now.
The Atlanta Journal-Constitution contributed to this story.