MARK-TO-MARKET: Americans’ summer travel plans face record gas price hikes | business economy

The US Energy Information Administration (EIA) officially defines the summer driving season as six months from April to September. However, Memorial Day weekend is the official start, as millions of Americans hit the open road on summer driving adventures.

Gasoline consumption tends to peak during the summer months. The EIA expects Americans to consume about 9.2 million barrels per day of gasoline in the summer season. That’s slightly above last summer’s pace but lower than the pre-pandemic 2019 level of 9.5 million barrels per day.

Just two months ago, the Energy Information Administration projected that this summer’s average gallon of regular gas would average $3.84 across the country, up from last season’s average of $3.06. But with the ever-rising gasoline prices, that projection increasingly looks like wishful thinking.

According to data from the American Automobile Association, the current national average for a gallon of regular gas is $4.60, which is a record. For the first time in history, the average price exceeded $4.00 in all 50 states. Nationally, the price of gas rose by $0.11 from the previous week, the third consecutive week with a double-digit increase. Gas prices are up $1.28 (35%) since Jan. 1 and $1.58 (49%) over the past 12 months. Many experts predict that the national average will exceed $5 per gallon in the coming months.

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As one might expect, gasoline prices vary widely across the 50 states. California maintains its unfortunate distinction of the highest gas prices on Earth, with a portfolio melt average statewide of $6.06 per gallon. Hawaii comes in second, with an average of $5.42 per gallon. The winner for the cheapest gallon of gas goes to Oklahoma ($4.08) followed by Kansas ($4.09).

Locally, the price you pay at the pump depends largely on which side of the Mississippi you fill. In Illinois, the average gallon of regular gas hit a record $4.98 — the seventh highest in the country. Gas prices have increased by $0.58 over the past 30 days and $1.76 over the past 12 months. In Chicago Cook County, the average price is $5.40 per gallon.

Iowa was better. The average price in the Hook State is a record high at $4.23 per gallon, but it’s still the 13th lowest in the state. Prices are up $0.38 in the past 30 days and $1.34 over the past year. Here in the Quad-Cities, the average gallon of gas on the Illinois side is $4.70. The Iowa side is $0.52 cheaper at $4.18.

The main reason behind the high gasoline prices is the continued rise in the price of crude oil. The price of West Texas Intermediate, the benchmark grade for crude oil produced in the United States, reached an 11-year high. Its current price of $115 a barrel is up 51% in 2022 and up 61% over the past 12 months.

Crude oil is a global commodity subject to global forces of supply and demand. Before the pandemic, US crude oil production hit a record high of 13.1 million barrels per day. This strained production pace has kept global supplies of crude oil saturated, helping to keep prices low. Today, US production is down 10%. Add to the sanctions imposed on Russian crude oil exports and it will create a powerful combination of higher crude oil and gasoline prices.

This summer, Americans’ penchant for travel will be tempered by higher gasoline prices. According to a Washington Post and George Mason University poll, 85% of respondents said gas prices would be a factor in making summer vacation plans. Sixty-one percent stated that he would play a “key” factor. So, if you are one of those who are considering making changes to their upcoming summer travel plans, rest assured, you are not alone.

Mark Grewczeski is a financial markets and economic analysis expert and investment advisor at Quad City Investment Group in Davenport.

Disclaimer: The opinions expressed here are subject to change without notice. Any prices or quotations contained in this document are indicative only and do not constitute an offer to buy or sell any securities at any particular price. The information was obtained from sources deemed reliable, but we do not warrant that the material presented is accurate or that it provides a complete description of the securities, markets or developments mentioned. Quad-Cities Investment Group LLC is a registered investment advisor with the US Securities and Exchange Commission.

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