Consumer Alert: Taking a summer road trip? Here’s what you may pay for gas by June
ROCHESTER, N.Y. – This consumer alert aims to help you plan for that summer road trip. To figure out what you may spend on gas, I’m introducing you to gas math. Gas math is not unlike new math. Parents, you know what it’s like when you’re sitting at the dining room table looking at your seventh grader’s math book and scratching your head in frustration. Gas math feels a lot like that. Essentially, economists are trying to solve for x when x equals a surprise production cut by OPEC plus another price hike when the expensive summer blend hits gas stations. It’s a number difficult to compute, but we know that it undoubtedly equals pain in our pockets. The question is how much pain.
We are certainly feeling some pain already. On Sunday April 2, OPEC surprised the world with the announcement of a huge production cut, more than a million barrels a day starting in May. The markets reacted immediately. Since that announcement, gas has jumped 30 cents here in Rochester. On Tuesday the average price was $3.70. And the more expensive summer blend usually adds five to 15 cents a gallon to the price at the pump.
The price of gas is closely tied to the price of oil because crude oil is the primary ingredient in gas. And last month, the price of oil fell to $67 a barrel. Analysts believe that’s the reason OPEC decided to cut production. They want to decrease global supply of oil and boost the price.
So how will this affect us at the pump? First, I went to the Energy Information Administration, or EIA. It believes increased production in North and South America will largely offset OPEC’s cuts. It predicts the price of gas this summer will average $3-$50 nationally and peak at $3.60 to $3.70 a gallon in June.
Now consider the fact the price in Rochester has hovered around a nickel above the national price. If the EIA is to be believed, gas will peak around $3-$75 in June. But we’re already at $3.70 without the summer blend. So I looked at other analysts. Leaders at the Price Futures Group believes $4 gas is a given this summer.
Infrastructure Capital Advisors’ leading analyst predicts only modest price hikes saying there’s no way we’ll see $5 gas like last year.
Kpler leaders predicts $4 gas, and agree $5 gas is unlikely.
So setting aside the rather rosy government forecast, most analysts are settling on a price around $4 a gallon by June. But so many things could affect prices, not the least of which is hurricane season that could affect refineries.
Undoubtedly gas math is hard. But this we know for sure; the OPEC surprise plus summer blend means more money will be needed for that summer road trip. Happy travels!