The U.S. typically sees a drop in gasoline prices as demand begins to tail off at the end of the summer travel season. This year is breaking the trend with gasoline prices sitting at their highest for the season since 2014, due in large part to the global oil price rally. AAA reports that the national price average was at $2.867 as of Wednesday, September 26th. Gasoline prices were 27 cents higher per gallon than they were at the same time last year, and this backwards trend could continue into the fall and winter seasons.
Oil industry experts are pointing to increasing sanctions against Iranian crude, combined with other OPEC countries and other major crude producers, like Russia, not increasing production to make up the difference in lost volume. U.S. gasoline inventories are at seasonal record highs which could offer some relief to increasing prices, according to Bob Yawger, Director of energy futures at Mizuho, but it might not be enough to actually reverse the current trend of increasing pump prices. The pump price increases come at a pivotal time with U.S. midterm elections right around the corner, however voter decisions usually aren’t swayed until consumers have to make “lifestyle changes” which typically occur when prices reach $3.25/gallon.
2018 has been a very unique year for the oil industry, with looming uncertainty still remaining. Time will tell if this backwards trend of increasing gasoline pump prices will continue, and what, if any, effect they will have on the geopolitical landscape. As of now, it appears there will be little immediate relief from higher prices.