Rising gasoline prices are set to keep rising during the next month.
But they may not continue to rise as fast as they have been, and they're not expected to approach prices from last summer, which hit $4.06 a gallon.
If EIA, part of the Department of Energy, is correct, that means consumers will be paying only 8 cents a gallon more than they currently are, with the price now at $2.62 a gallon.
The forecast also means that the rate of increase will slow. During the past week, prices are up 9 cents a gallon, according to American Automobile Association’s Fuel Report. They are up 40 cents a gallon from a month ago. But, they are down $1.40 a gallon from a year ago.
“The story is strictly about the price of crude oil,” says Tancred Lidderdale, an energy analyst at EIA in Washington.
The price of crude oil was just more than $68.00 a barrel Tuesday, up from a low of $45.90 a barrel on April 20.
Analysts estimate there is a 2.4 cent a gallon change in the price of regular for every $1 a barrel change in the price of crude oil. Since April 20, the price of gasoline is up 56 cents a gallon.
“We see a little bit more strength in gasoline given the price of crude oil,” says Mr. Lidderdale.
One of the major reasons for the rising price of crude oil is perceptions the US economy is starting to slow its rate of decline. Another factor is the decline in the price of the US dollar as investors start to move out of US Treasury bills and begin to contemplate inflation prospects, says Mike Fitzpatrick of MF Global.
“The dollar is getting sold across the board, it’s getting pounded compared to the pound and the Euro,” he says. “That’s helping oil.”
But the price of oil has yet to show it can stay above $70 a barrel. “It’s real tenuous at this point,” he says of the price action.
Oil prices also received a little help with reports that demand for gasoline rose during the Memorial Day weekend. That week, gasoline demand rose to 9.5 million barrels a day, its strongest level in quite a while, says Sander Cohan, a gasoline analyst at Energy Security Analysis, Inc. in Wakefield, Mass. “But, it’s come right back down again to 9 million barrels a day,” he says.
The EIA will release new production and consumption statistics Wednesday.