U.S. Average Gas Price Climbing Toward $2

WASHINGTON, D.C. — Seasonal increases in fuel demand and reduced production are driving the national average price of gas closer to the $2 mark.

According to AAA, Monday's U.S. average gas price of $1.98 per gallon was the highest daily price since January. Drivers are paying a nickel more per gallon than a week ago and 27 cents more per gallon than a month ago.

However, even with these price increases at the pump, consumers continue to benefit from yearly savings as prices remain 44 cents per gallon cheaper than a year ago.

As the association explained, gas prices tend to reach the highest levels of the year in the spring, before the summer driving season.

"As the weather turns warmer and days grow longer, people tend to drive more, which results in increased demand," AAA said. "Many families also take spring break road trips this time of year, which means they may use more gasoline than normal."

The increased demand is coupled with refineries conducting maintenance to prepare equipment for the busy summer driving season, which leads to a temporary decline in fuel production, AAA added.

In addition, refineries begin to transition to summer-blend gasoline, which is more expensive to produce. Summer-blend gasoline is mandated because it causes less air pollution in warmer temperatures. 

"These factors typically lead to higher gas prices this time of year and have helped push prices higher in recent weeks," according to AAA.

On the West Coast particularly, the shift between supply and demand is pushing average gas prices up for the week in some markets. ExxonMobil's Torrance, Calif., refinery experienced a power outage and is reportedly delaying the restart of its gasoline production equipment. The refinery produces about 10 percent of California's gasoline and has been operating at reduced capacity since February 2015.

Looking at current gas prices on a state-by-state basis, California leads the nation with the highest average price for retail gasoline ($2.68). Hawaii comes in second ($2.55), with Nevada ($2.32), Washington ($2.24) and Alaska ($2.22) rounding out the top five most expensive markets. 

The least expensive U.S. market for retail gasoline is New Jersey ($1.73), which is also the only state with an average price below $1.75 per gallon.

Week over week, AAA found that drivers in 45 states and Washington, D.C., are paying more to fill up vs. one week ago. Retail averages in 19 states are up by a nickel or more per gallon week over week. Meanwhile, gas prices in Arizona, Nevada and Florida have climbed higher, by more than a dime per gallon over this same period. 

Averages are down in five states for the week, but have fallen in a less dramatic fashion. Motorists in Missouri, Illinois, Minnesota, Ohio and Indiana are experiencing weekly savings at the pump, but prices have fallen by less than a nickel per gallon in each of these states.

Month over month, with the exception of Hawaii and Alaska — two of the nation's most expensive fuel markets — drivers nationwide have seen prices rise by more than a nickel per gallon compared to a month ago, according to AAA. Gas prices are up double-digits in 43 states and Washington, D.C., on the month, and drivers in 26 states have seen prices climb by a quarter per gallon or more over this same period. 

Drivers in Nebraska, Kentucky, Kansas and Iowa are experiencing the largest monthly increases in price due to a significant decline in regional production as local refineries either conduct maintenance or cut back on production due to low margins, AAA added.

Even still, drivers in every state and Washington, D.C., are benefiting from yearly savings at the pump of more than a quarter per gallon. Averages in 13 states are down 50 cents or more year over year, with the largest savings in states west of the Rockies: Alaska (down 71 cents), Oregon (67 cents), California (60 cents) and Utah (60 cents), the association said.