Market Insider

Gasoline prices jump to 19-month high and could be headed higher with spring driving season here

Key Points
  • Average price for unleaded gasoline nationally hits $2.38 per gallon in March, a 19-month high, according to AAA.
  • Spring driving season could add another 10 to 15 cents to that level, trader predicts.
A customer prepares to pump gasoline at a Chevron gas station in San Rafael, Calif.
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Gasoline prices have rapidly risen to a 19-month high and could jump another 20 cents per gallon during the spring driving season.

The average price for unleaded gasoline nationally is $2.38 per gallon, 8 cents per gallon higher than at the end of March, according to AAA. The price is also just above the highest average retail price during 2016 and is the highest level since September 2015.

"I think we're going to get another 10 to 20 cents" this spring, said Tom Kloza, global head of energy analysis at the Oil Price Information Service. "Anything beyond that would be event driven."

Kloza expects oil to stay in the mid-$50s per barrel, but if it shoots higher due to an unforeseen geopolitical factor or other event, like a hurricane, gasoline would also go higher.

Gasoline prices typically rise in the spring, as demand increases and after refineries switch to summer driving fuels. Last year, prices peaked at $2.379 in June, and they are currently 34 cents per gallon higher than at the same time last year. Until recently, the gasoline market has been working down a glut of winter fuel and gasoline prices stayed flat in March.

The pinch from higher gasoline prices comes now as some consumer spending data are starting to look weaker. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was flattish, rising just 0.1 percent in February.

A move higher in prices at the pump has been expected, just from the sheer fact that oil prices are sharply higher than they were last year. The long decline in crude ended with West Texas Intermediate bottoming at about $26 per barrel in February 2016, and the price has doubled since then.

WTI oil futures for May were trading just under $53 per barrel Monday.

"I think [gasoline] can go higher. It really all depends on the oil market and we're seeing risk premium," said Andrew Lipow, president of Lipow Oil Associates. The premium has been relatively small but crude has moved higher since the U.S. bombed a Syrian airfield.

Lipow said he expects oil to get a boost when OPEC and its partners decide in May to extend their production agreement.

Kloza said he does not believe any of the move higher in gasoline at the pump or the anticipated rise has to do with Syria.