Gas may be $1 higher for peak travel season

Just weeks into the U.S. government’s official summer driving season, Arkansans and U.S. motorists are already seeing pump prices at peak vacation levels when most Americans hit the road.

Traditionally, U.S. motorists kick-off the summer driving season on Memorial Day weekend. However, the Energy Information Administration sets April 1 through Sept. 30 as the official dates for the vacation period.

And this week, the EIA revised its short-term forecast, projecting that the retail price of regular-grade motor gasoline will average $3.86 per gallon during this summer’s driving season, up from $2.76 per gallon last summer.

Overall, the Department of Energy information agency forecasts that the annual average regular retail gasoline price will increase from $2.78 per gallon in 2010 to $3.70 per gallon in 2011 and to $3.80 per gallon in 2012, the EIA said.

The EIA’s projected monthly average regular retail gasoline price peaks this year at $3.91 per gallon in early summer. Diesel fuel prices, which averaged $2.98 per gallon last summer, are projected to average $4.09 per gallon this summer.

Short term, Arkansas motorists should expect local pump prices to continue to rise as the weather gets hotter, especially given that international crude oil prices are trading near 30-month highs.

“Current market prices of futures and options contracts for gasoline suggest a 33-percent probability that the national monthly average retail price for regular gasoline could exceed $4.00 per gallon during July 2011,” the EIA said in its monthly forecast on Monday.

The EIA also stated that the projected spike in gasoline prices is starting to affect American’s pocketbooks, although not enough to halt the current recovery.

“The continuing economic recovery tends to boost gasoline and diesel fuel consumption, while the effect of higher retail prices tends to dampen it,” the EIA said. “These counter-balancing forces are expected to be prominent features of the summer driving season.”

Meanwhile, the cost to fill up will be about $825 higher in 2011 than they were in 2010. U.S. households drove an average 20,251 miles with an average passenger car fuel efficiency of 22.6 miles per gallon, according to the 2009 National Household Travel Survey.

Assuming no change in travel or average fuel economy, the increase in the average annual gasoline retail price (all grades) from $2.40 per gallon in 2009 to $2.83 per gallon in 2010 and a projected $3.75 per gallon in 2011 implies an increase in average annual household expenditures on gasoline from $2,535 in 2010 and $3,360 in 2011.

In Arkansas, diesel prices officially topped the four-dollar mark, settling this week at $4.01 a gallon, according to AAA’s daily fuel gauge. That price is 12 cents higher than a week ago and exactly $1.03 higher than the same period a year ago. Arkansas motorists are paying an average of $3.70 per gallon for regular unleaded, up 11 cents from last week and 96 cents higher than a year ago.

Pump prices in Arkansas’ metropolitan areas range from a low of $3.67 per gallon in the Pine Bluff area to a high of $3.72 per gallon in the Fayetteville-Springdale-Rogers area. Motorists in Fort Smith and the Little Rock-North Little Rock area are paying an average of $3.69 a gallon to fill up their tanks, while the current retail price in Texarkana is holding at $3.70 per gallon.

If the upward trend continues, Arkansas is poised to top the highest average price for regular unleaded by Memorial Day – when most Arkansas travelers take time off for vacation. That record price of $3.97 per gallon was reached on July 17, 2008.