VIRGINIA BEACH, VA (March 28, 2019) – Spring fever may be in the air, but American motorists already have summer road trips top of mind. AAA’s latest Gas Price survey found that if gas prices remain low, 1 in 3 Americans (33 percent) would likely plan another summer road trip while 27 percent would increase the distance of one – with Generation X more likely to do both than Baby Boomers. AAA expects the national gas price average this spring to reach $2.75, a savings of nearly 20-cents compared to last spring’s high of $2.92.
“Cheaper crude oil prices have helped to keep pump prices lower this winter,” said Katharine Beachboard, AAA spokesperson. “While we are seeing the national gas price average increase and mirror prices from this time last year, spring pump prices for the majority of motorists are not expected to elevate to the nearly $3/gal level of last May.”
Currently, gas prices in Virginia are $2.44, a five-cent increase from last week and a 20-cent increase from last month, but still cheaper than last year by three cents. In Hampton Roads, gas prices are a bit higher at $2.45 per gallon of gas, an eight-cent increase from last week, 28 cents more than last month, but four cents less than last year.
However, motorists on the West Coast and in the Rockies region will likely see prices reach or exceeded $3/gal, which is similar to last year.
In addition to increasing the number or mileage of summer road trips, the AAA survey shows that Americans said lower gas prices would encourage them to spend or save more, but this varies based on generation and region:
- The majority of Millennials (53%) and Gen X (49%) would put aside money for savings as compared to Baby Boomers (44%).
- Generation X is more likely to increase shopping/dining out, drive more on a weekly basis or use more expensive gas as compared to Baby Boomers.
- Motorists in the South (11%) and West (10%) say they would use more expensive gas while five percent of those in the Mid-West (5%) and seven percent in the Northeast (7%) would be willing to upgrade fuel type.
Springing Gas Prices
While the first few months of this year ushered in daily national gas price averages that were, at times, as much as 35-cents cheaper than a year ago, pump prices since the middle of March have been mostly similar to pump prices this time last year. Today’s national gas price average is four-cents more expensive than a year ago.
“Historically, early spring triggers an increase in pump prices due to an increase in demand as Americans put the winter blues behind them and drive more. Another factor pumping up the price is the switchover to summer-blend gasoline, which is more expensive for refiners to produce,” added Beachboard.
The difference between summer- and winter-blend gasoline involves the Reid Vapor Pressure (RVP) of the fuel. RVP is a measure of how easily the fuel evaporates at a given temperature. The more volatile a gasoline (higher RVP), the easier it evaporates. Summer-blend gasoline has a lower RVP to prevent excessive evaporation when outside temperatures rise. Reducing the volatility of summer gas decreases emissions that can contribute to unhealthy ozone and smog levels. A lower RVP also helps prevent drivability problems, especially in older vehicles. Summer-blend is more expensive to produce and that cost is passed on to the consumer each spring.
Motorists benefitted this winter from lower crude prices, which comprises approximately 50 percent of the prices paid at the pump. Crude prices ranged between $48 and $56 this winter, while winter 2018 saw consistent prices between $60 and $65. This difference helped to keep pump prices mostly cheaper this winter, but crude prices are likely poised to increase this spring possibly back to $65, which will propel gas prices higher as gasoline demand increases across the country.
Moreover, moving into spring, crude prices will likely increase as the Organization of the Petroleum Exporting Countries (OPEC) continues to implement its agreement with other global crude producers to cut production by 1.2 million b/d, which remains in effect through June. OPEC has announced that it will not meet in April to discuss the pact; instead, it will meet on June 25 and 26 and may announce a decision to end or extend its agreement at that time. OPEC and its partners will likely look toward global pricing trends around the time the cuts are set to expire as well as global crude demand forecasts, and how well members of the reduction pact have adhered to the production cuts to determine if it should extend its pact beyond June. If it does and crude prices rise dramatically, American motorists could see pump prices spike later in the summer.
Additionally, U.S.-imposed sanctions meant to curtail crude exports from Iran and Venezuela will likely tighten global supply and help crude prices inch up this spring. The exact price impact will be determined by how stringently the U.S. enforces the sanctions. Some market observers believe the U.S., which is now the world’s leading crude producer, could help meet global demand because of its newfound export prowess. However, growth in domestic demand for crude, particularly during the high demand driving season this summer, may limit just how much the U.S. is able to contribute to the global crude market.
Summer Look Ahead
AAA expects summer 2019 gas prices to be on par with prices during summer 2018, with May seeing the highest prices of the year. Heading into summer, a variety of factors, including U.S. supply-demand levels, U.S. production and crude prices will help better shape the summer forecast.
Visit GasPrices.AAA.com for national and state gas price averages and trends.
As part of North America’s largest motoring and leisure travel organization, AAA Tidewater Virginia provides its more than 330,000 members with travel, insurance, financial and automotive-related services. Since its founding AAA Tidewater Virginia has been a leader and advocate for the safety and security of all travelers. For more information, visit AAA.com and follow us on Twitter at Twitter.com/AAATidewaterVA or Facebook at facebook.com/AAATidewaterVirginia.