More Demand & Higher Oil Costs Boost Gas Prices

WASHINGTON, D.C. — Gas prices are at their highest levels in more than six months and the national average has remained above $2 per gallon for 40 consecutive days, according to AAA's latest Fuel Gauge Report. The average price for a gallon of regular gasoline reached $2.22 as of May 2, up eight cents from one week ago and 16 cents from one month ago.

However, plentiful gasoline supplies and relatively lower crude oil costs are helping to sustain year-over-year savings, with the current national average still down 39 cents per gallon from one year ago.

Gasoline demand continues to break seasonal records due to low prices motivating people to drive more. Rising crude oil costs also recently reached new heights for 2016. The combination of increased demand and more expensive oil costs has helped push gas prices higher in many areas of the United States in recent weeks, and prices may increase further heading into the summer driving season.

The average gas price for April was $2.10 per gallon, marking the lowest average for the month since 2009. Only 20 percent of U.S. gas stations are still selling gas for less than $2 per gallon, and fuel demand is up 5.6 percent compared to one year ago, according to data from the U.S. Energy Information Administration. Gas prices are up 52 cents per gallon from the mid-February low for 2016.

Only four states are posting averages below $2 per gallon, or nine fewer than one week ago. Although retail averages have historically fluctuated at this time of year and despite the overall price at the pump beginning to trend higher, gas prices during this year's summer driving season should remain noticeably discounted compared to previous years, AAA said.

The top five most expensive markets are California ($2.80), Hawaii ($2.58), Nevada ($2.48), Alaska ($2.42) and Washington ($2.42), while the five least expensive markets are Oklahoma ($1.96), Texas ($1.98), Missouri ($1.99), Kansas ($1.99) and Mississippi ($2). The most common price at the pump is $1.99 per gallon. 

Interestingly, six out of the nation's top 10 most expensive retail markets are located on the West Coast, but the five states nationwide that are posting yearly discounts of more than 50 cents per gallon are also located in this region: California (yearly discount of 88 cents), Alaska (68 cents), Nevada (66 cents), Hawaii (61 cents) and Oregon (59 cents).

Prices in the Midwest are swinging significantly due to movement in supply and demand, with retail averages up double digits in Michigan (13 cents), Ohio (13 cents), Indiana (11 cents) and Illinois (10 cents). Month-to-month averages are up by more than a quarter per gallon in Illinois (29 cents), Indiana (28 cents) and Ohio (28 cents).

Despite these increases, the Midwest is also home to some of the least expensive markets for retail gasoline, including Oklahoma ($1.96), Missouri ($1.99) and Kansas ($1.99).

The Gulf Coast region also has some of the nation's least expensive markets for retail gasoline, including Texas ($1.98), Louisiana ($2), Arkansas ($2) and New Mexico ($2.03).

According to a new survey by AAA, half of U.S. drivers now believe the price of gas is "too high" at $2.50 per gallon, a figure that has dropped significantly in relationship to the price of gas. As recently as 2014, half of Americans believed that the price of gas was "too high" at $3.30 per gallon, while half of Americans called it "too high" at $3 per gallon in 2015.

Only 9 percent of U.S. gas stations are selling gas for more than $2.50 per gallon today.

Although gas prices are at their lowest levels since 2009, more than 35 percent of Americans believe gas prices are "too high" based on the current average price. Additionally, the vast majority of Americans do not believe gas is "cheap" today.