Gasoline Prices Nearing Multiyear Highs

If you fill up your car’s gas tank with any regularity, you don’t need me to tell you that prices at the pump are on the rise. AAA reports that the national average price of regular unleaded now stands at $2.72 per gallon, up from $2.54 a month ago and $2.41 this time last year. (That national average contains a lot of regional variability. In California, for instance, regular sells for $3.55. In South Carolina, just $2.49.)

Will the run-up keep going? And just how high will prices get?

The answer to the first question is, almost certainly: Yes. Just as surely as winter turns to spring, gasoline prices tend to start climbing around the start of the year and peak several months later. Why? Partly because refineries begin making costlier, summer-blend gas. And partly because fuel demand perks up in the spring when more folks start vacationing.

This time around, the average price bottomed out at $2.45 per gallon a week before Christmas. It’s been mounting ever since. I expect the trend to continue a while longer.

Predicting how much higher prices will go is tricky, but recent history provides some useful guidance. Over the last five years, the magnitude of the winter-to-spring jump has averaged about 57 cents per gallon. So far this spring, the national average is up 27 cents. If this seasonal pattern holds, expect another 30-cent increase, topping $3 per gallon for the first time since late 2014.

What about crude oil’s role? All things being equal, the costlier oil is, the more expensive refined fuels, such as gas, are. But note that the seasonal gas-price hike tends to play out even when oil prices aren’t on the march. Last spring, gas prices climbed by 30 cents per gallon: A 14% increase. But crude only increased by 4%.

So, even if oil prices hold steady, gasoline can, and probably will, keep edging higher. If crude rallies beyond this winter’s boost, the resulting gas-price spike will be even sharper. For instance, the spring of 2015 saw oil prices rise by $20 per barrel, which helped fuel a 68-cent jump in gas prices. Such a scenario looks unlikely this year unless some sort of geopolitical crisis interrupts oil shipments somewhere in the world.

But under any realistic assumption, gasoline will cost more in a few weeks than it does now. If your tank is getting low, now might be a good time to fill it to the brim.