As U.S. gasoline production increases in anticipation of the summer driving season, the American Automobile Association said it is expecting prices at the pump to drop by Memorial Day, May 26.
The AAA reported a national average price on May 5 of $3.67 -- about 3 cents lower than what the motor club said was a seasonal high, on April 28.
Michael Green, an AAA spokesman, told Oilprice.com that the national average price for a gallon of regular unleaded gasoline has declined for nearly a week straight, the longest streak since mid-January. Before last week's high-water mark, the average price had increased 76 out of 80 days.
"It seemed that drivers couldn’t catch a break with gas prices rising nearly every day since February," he said. "Last week’s high of $3.70 per gallon was the most expensive in more than 13 months, and nearly nine percent of the [filling] stations [nationwide] were selling gas for more than $4 per gallon."
Gasoline prices in April increased in part because of seasonal refinery maintenance and pressure on crude oil prices from the closure of export terminals in Libya and the ongoing crisis in Ukraine. Near the end of April, the U.S. Energy Information Administration (EIA) said more U.S. refiners were selling gasoline overseas to take advantage of higher prices.
EIA said gasoline production declined for the week ending April 25. And while motor gasoline inventories increased by 1.6 million barrels for that week, the administration said that level was in the lower half of what it considered an average range.
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Crude oil production of 8.3 million barrels per day for the week ending April 25 was marginally lower as well, though all of the declines came from Alaska.
The AAA’s Green said U.S. refineries should start to increase their production ahead of Memorial Day, a holiday that's considered the start of the summer driving season, when demand rises. The increase in production for May should outpace consumer demand and push prices at the pump even lower than what they are today.
"Most drivers should pay at least a little less for gas by Memorial Day weekend," he said.
Gasoline stockpiles are already rising, with EIA reporting 1.56 million barrels on hand and the first weekly increase since the middle of February.
EIA said it expects May prices to average around $3.66 per gallon and drop to $3.46 by September. Barring any major escalation in the Ukrainian crisis or unscheduled refinery problems, Green said that while prices are a bit higher now, they've likely reached their seasonal peak.
By Daniel J. Graber of Oilprice.com