Gas prices remain high ahead of the Labor Day holiday weekend that unofficially marks the end of the summer travel season.
Nationally, the average price for a gallon of gasoline was $2.83, up more than 40 cents from a year ago when motorists were dealing with the turmoil in the oil markets caused by Hurricane Harvey, according to AAA, the North American travel club.
In Arkansas, the average price was $2.56, 30 cents higher than this time last year.
"We haven't paid these kind of prices in about four years," said Mike Right, the spokesman for AAA Missouri.
Gas prices haven't budged much all summer. A month ago, the national average for a gallon of regular-grade gasoline was $2.85. In Arkansas, it was $2.59.
Patrick DeHaan, head of petroleum analysis at GasBuddy.com, agreed that fuel prices have been expensive this summer.
"It's been consistently a more painful summer at the pump than what we've been accustomed to when compared to the last few summers," he said.
Arkansans will see small differences in gas prices around the state, ranging from an average price of $2.50 per gallon for regular gasoline in Hot Springs to $2.61 in Pine Bluff.
The two major metropolitan areas of the state have gas prices in the middle. In the greater Little Rock area, the average price is $2.55 while in Northwest Arkansas, the average price is $2.58.
DeHaan predicted that gas prices will head south this fall but that consumers shouldn't expect a steep drop.
"Without major hurricanes, we should continue to see prices gently decline in the weeks ahead as demand begins to slow into the autumn, wrapping up the priciest summer at the pump since 2014, but overall, with a moderately less sting than what we saw earlier on this decade," he said.
Still, Right said the record pace of travel found on other holidays earlier this summer will continue unabated this weekend.
"I would expect it's going to be a very busy year in terms of motor vehicle as well as air travel over the weekend," he said. "All of the holidays thus far this year have pretty much set records in terms of the number of people traveling over the holiday period."
AAA no longer conducts a survey to measure how many people will travel over the Labor Day weekend. But A4A, the industry trade organization for the major U.S. airlines, released its own survey on air travel, which it said would set a record.
The trade organization said it expects 16.5 million passengers to fly worldwide on U.S. carriers over the week-long Labor Day travel period, which began on Wednesday and concludes on Tuesday. The figure represents a 3.5 percent increase over the 16 million passengers estimated to have flown over the same holiday period last year.
"This Labor Day, U.S. airlines are enabling more passengers than ever before to take to the skies," said A4A Vice President and Chief Economist John Heimlich.
Right credited a robust economy for the record pace of travel.
Arkansas' joblessness rate dipped to 3.7 percent in July after five straight months at 3.8 percent, according to the U.S. Bureau of Labor Statistics. The national unemployment rate in July was 3.9 percent, down from 4.0 percent in June.
Meanwhile, the Conference Board said consumer confidence has increased to its highest level in 18 years.
"Consumer confidence is great, unemployment is great," Right said. "It's not going to dissuade anyone from going anywhere. Well, not any large number of people. People have got more money to travel this year than they have many years in the past."
Any spike at the pump now usually is blamed on the approaching holiday, but Right said other factors loom large.
"There's a lot of other things going on in the oil business right now," he said. "For example, crude oil prices are up about $5 a barrel from what they were 10 days ago. Wholesale gasoline is up about 13 cents a gallon from what it was two days ago. There's some pressure in the market."
That pressure includes U.S. sanctions on the purchase of oil from Iran, which is set to begin Nov. 4.
Crude closed above $70 a barrel for the first time in a month as supplies from the U.S. and Iran shrink.
West Texas Intermediate crude for October delivery climbed 74 cents to settle at $70.25 a barrel on the New York Mercantile Exchange, the highest in more than five weeks. Total volume traded was about 35 percent below the 100-day average.
Gasoline futures added 1.8 percent to settle at $2.1435 a gallon, the highest since the end of July.
Futures in New York advanced 1.1 percent on Thursday. At the same time as American crude stockpiles declined and production stalled, Iran's customers are facing difficulties buying its crude even before sanctions are enforced on Nov. 4. The Islamic nation is also threatening to halt Middle East oil exports if it's not allowed to ship its crude through the Strait of Hormuz.
"At the end of the day, what we are seeing is a tighter U.S. market. We are seeing stagnation on the oil production side," said Bart Melek, head of global commodity strategy at TD Securities in Toronto. "This along with an economy that's still running pretty firm in the United States," as well as sanctions on Iran has kept prices higher, he said.
Sustaining the rally may prove challenging as seasonal fall refinery maintenance is approaching, which typically leads to crude inventory decreases as refiners lower their demand for oil. But shortfalls from Iran could help boost U.S. exports.
"If you're bullish this market, you are effectively betting that exports are going to offset the usual drop-off in oil demand in the fall due to refinery maintenance," said Bill O'Grady, chief market strategist at Confluence Investment Management LLC in St. Louis. "If that's the case, these prices might be justified."
Meanwhile, in some parts of the nation, refineries are beginning to convert inventories from summer-grade fuel to winter-grade fuel.
"If there's a glitch in the distribution system, you're going to see a noticeable impact on prices," Right said. "Normally, it's very temporary."
Information for this article was contributed by Bloomberg News.
Metro on 08/31/2018