Gas prices typically slide this time of year, pulled down by sluggish demand as the public settles into its post-holiday routine and with the conversion to pricier summer blends still a month away.
But numbers at the pump are spinning upward, breaking with convention. Motorists in Waco were spending an average of $2.34 per gallon for regular unleaded on Friday, an 8-cent jump from a week earlier, GasBuddy petroleum analyst Patrick DeHaan said.
Statewide, the story was much the same. The norm had climbed to $2.36 a gallon for regular unleaded on Friday, a 3-cent increase.
“Waco is seeing a little bit more of a jump,” DeHaan said. “I think other metropolitan areas will follow. Waco is just out front.”
Still, Texas enjoys the lowest gas prices in the nation, meaning the trend of seeing bargains prevail in January and February was being bucked from coast to coast, according to reports at GasBuddy.com.
In a GasBuddy Q-and-A, DeHaan offers several reasons why gas prices are rising even as U.S. refineries are churning out 10 million barrels of oil per day, “the highest level since 1970 and very close to an all-time record.”
First, the Organization of Petroleum Exporting Countries has held firm on its pledge to prop up prices by curtailing output, he said.
“OPEC’s production cuts have removed more than 500 million barrels, 1.8 million barrels per day, of supply since they were enacted to start 2017,” DeHaan wrote. “Second, U.S. oil exports are at record levels, further draining supply from the United States.”
Crude oil exports had been banned with very few exceptions after the 1973 OPEC oil embargo, an effort to prevent supply disruptions. With domestic production soaring, a law to lift the ban passed in 2016.
“U.S. production is nearing record levels, but the rise in U.S. production can’t come close to offsetting OPEC’s production cuts, which have seen over 100 percent compliance,” DeHaan wrote. “Also, unexpected is the economic collapse in Venezuela, which saw 2017 oil exports at their lowest level since 1989.
“Oil would most certainly be much higher without the ‘shale revolution’ we’ve seen in the last decade. The United States went from producing 5-6 million barrels a decade ago to nearly 10 million today. However, we still import the remaining 10 million barrels per day that we consume. In addition, China saw imports of crude oil at record levels and are nearing the level of imports of the United States.”
The bottom line is that oil is a global commodity, and supply worldwide is down, he wrote. That exerts upward pressure on prices in the United States, even during off-peak driving seasons.
Going forward gas prices nationally may hit $2.75 to $2.90 a gallon for regular unleaded by spring, “with more areas hitting $3 than we previously anticipated just a month ago,” DeHaan wrote.
Refinery maintenance and the conversion to summer-blend gasoline that starts in mid-March send prices even higher.
The purring U.S. economy also may impact prices at the pump. The government is reporting that an estimated 200,000 new jobs were created in January, exceeding estimates, and that wages across all private sectors rose an average of 2.9 percent between January 2017 and last month, the largest year-over-year increase since June 2009.
“More people are driving to work, and they may have more disposable income, which typically increases demand for gasoline and other fuels,” DeHaan said. “So it is accepted that a strong economy is blamed, or credited, with putting upward pressure on gas prices.”
The AAA auto club reported in its Texas Weekend Gas Watch, released Thursday, that the national average for a gallon of regular unleaded had climbed to $2.59, a 3-cent increase from the previous week. It stands more than 20 cents higher than the statewide average.
Texas continues to have the least expensive gasoline in the nation, according to GasBuddy. Its average dwarfed by the $3.30-cent average in California and the $3.34 norm in Hawaii.
Even with its jump at the pumps, Waco had the fifth-lowest average among major metropolitan areas around the state, behind only San Antonio, Fort Worth, Houston and Amarillo, according to GasBuddy.
The Sam’s Club in Bellmead had the lowest price in Greater Waco, charging cardholders $2.24 a gallon for regular unleaded.