MARK-TO-MARKET: Americans’ summer travel plans face record-high gas prices - Quad-City Times

The U.S. Energy Information Administration (EIA) officially defines the summer driving season as the six months from April to September. However, it’s the Memorial Day weekend that serves as the formal kick-off, as millions of Americans hit the open road on their summer driving adventures.

Consumption of gasoline tends to peak during the summer months. The EIA projects Americans will consume roughly 9.2 million barrels per day of gasoline this summer season. This is slightly above last summer’s pace but below 2019’s pre-pandemic level of 9.5 million barrels per day.

Just two months ago, the EIA projected a gallon of regular gas this summer driving season would average $3.84 across the nation, up from last season’s average of $3.06. But with the continued rise in gasoline prices, that projection increasingly seems like wishful thinking.

According to data from the American Automobile Association, the current national average for a gallon of regular gas now stands at $4.60, a record high. For the first time in history, the average price has exceeded $4.00 in all 50 states. Nationally, the price of gas rose $0.11 from the prior week, the third consecutive week with a double-digit increase. Gas prices have risen $1.28 (35%) since Jan. 1 and $1.58 (49%) over the past 12 months. Many experts project the national average to exceed $5 per gallon in the upcoming months.

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As one might expect, gasoline prices vary significantly across the 50 states. California maintains its woeful distinction for the highest gas prices in the land, with a wallet-melting statewide average of $6.06 per gallon. Hawaii comes in at No. 2, averaging $5.42 per gallon. The winner for the cheapest gallon of gas goes to Oklahoma ($4.08) followed closely by Kansas ($4.09).

Locally, the price you pay at the pump is heavily dependent on which side of the Mississippi River you fill up on. In Illinois, the average price for a gallon of regular gas is a record-high $4.98 — the seventh highest in the nation. Gas prices have risen $0.58 over the past 30 days and $1.76 over the past 12 months. In Chicago-Cook County, the average price is a blistering $5.40 per gallon.

Iowa has faired better. The average price in the Hawkeye state is a record-high $4.23 per gallon but still the 13th lowest in the nation. Prices have risen $0.38 in the past 30 days and $1.34 over the past year. Here in the Quad-Cities, a gallon of gas on the Illinois side averages $4.70. The Iowa side is $0.52 cheaper at $4.18.

The main cause behind the higher gasoline prices is the continued rise in the price of crude oil. The price of West Texas Intermediate, the benchmark grade of crude oil produced in the U.S., is at an 11-year high. Its current price of $115 per barrel has risen 51% in 2022 and is up 61% over the past 12 months.

Crude oil is a global commodity, subject to the global forces of supply and demand. Before the pandemic, U.S. crude oil production reached a record-high 13.1 million barrels per day. This once-torrid pace of production kept global crude oil supplies saturated which helped keep prices low. Today, U.S. production has fallen by 10%. Add in sanctions against Russia’s crude oil exports and it creates a potent mixture for higher crude oil — and gasoline — prices.

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

Mark Grywacheski is an expert in financial markets and economic analysis and is an investment adviser with Quad-Cities Investment Group, Davenport.

Disclaimer: Opinions expressed herein are subject to change without notice. Any prices or quotations contained herein are indicative only and do not constitute an offer to buy or sell any securities at any given price. Information has been obtained from sources considered reliable, but we do not guarantee 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 adviser with the U.S. Securities Exchange Commission.

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