Despite forecast for lower gas prices, they’re up 6.5%
Where’s that $3 a gallon gas we were promised?
A little more than a month ago, prices at the pumps were in a free fall. From a mid-April average of $3.89, the cost of gasoline at some Massachusetts stations tumbled to $3.12, and there was talk it would drop even lower. At the time, one industry analyst told the Globe, “We may have seen the end of the era of high gasoline prices.”
Since the July 2 low of $3.36, the average price of a gallon of gas statewide has risen 6.5 percent to $3.58, according to AAA Southern New England.
Nationwide, the average price climbed 5.1 percent in July, the largest increase ever recorded for the month.
“I think it’s an aberration,” said Phil Flynn, an energy analyst at Price Futures Group in Chicago. “If you look at what’s really driving prices, it’s all of these situations that, hopefully, aren’t going to happen every day.”
Flynn attributes the turnaround in prices to series of pipeline leaks and refinery fires, including recent blazes in Tulsa, Okla., and Richmond, Calif., where a fire at a crucial Chevron refinery is threatening to push prices on the Pacific Coast over $4 a gallon. Regardless, Flynn said, fundamental indicators, like supply and demand, still point to lower prices in the long run.
“Despite everything going wrong that could possibly go wrong, we still haven’t approached the high price of the year yet,” he said, referring to the April peak. “Obviously, prices are going up, but barring more disasters, they will come down.”
Other analysts agreed that prices would drift downward the rest of the year, but disagreed about why prices are escalating now.
“It’s becoming more and more accepted that trading and speculation on Wall Street are affecting prices at levels not seen in the past,” said Matt LeLacheur, executive director of the New England Service Station and Automobile Repair Association.
He said refinery fires and other disruptions would mostly affect consumers in the areas served by those facilities, not the whole nation. Instead, LeLacheur cited a combination of market forces, lingering fears about conflict in the Middle East, and higher demand during summer vacation months.
“Traditionally, this is your highest-price season,” LeLacheur said. “If tradition holds, everything should start to decrease from here.”
But with high prices expected to linger through August, what can drivers do to mitigate the impact? Scout for a deal, said AAA spokesman John Paul — but only within reason.
“It doesn’t make any sense to drive 50 miles to buy cheap gas, but it certainly does make sense to shop around,” Paul said. “You can see a 20-cent variance from lowest to highest price just within one town.”
Paul also said consumers should not be shy about using supermarket or credit card rewards programs. But those perks aren’t enough to mute the displeasure of shelling out $50 or more at a gas station, even for someone who understands the cyclical nature of the oil industry.
“It still stuns me every time it happens,” Paul said.