$2 gas is gone — for now
NEW YORK (CNNMoney) — Gone are the days of $2 gas — at least for now. Prices at the pump have climbed steadily for five weeks in a row.
The national average for a gallon of regular gas jumped nearly 40 cents a gallon in that period, to $2.43 a gallon, according to AAA.
That’s the longest streak of increases in about two years, pushing average price back above $2 a gallon in all 50 states. In January, more than half of U.S. gas stations were selling gas for less than $2, and the national average stood at $2.03 a gallon.
Despite the price increase, drivers are still saving money at the pump. Prices are currently 90 cents a gallon below where they were in September 2014.
In January, before prices bottomed out, a gallon of gas was selling for less than the cost of the crude used to make it, according to Tom Kloza, chief oil analyst for the Oil Price Information Service, which tracks prices on behalf of AAA.
Those low prices prompted refiners to cut back on production, Kloza said. He expects prices to rise through March as refiners prepare to switch to more expensive summer blends of gasoline.
But crude prices are still very low. Weakening economies in Europe and Asia, as well as more fuel efficient vehicles, have all cut worldwide demand for crude. An increase in U.S. oil production, which made the nation the world’s largest source of oil last summer, has also pushed prices down, as has OPEC’s refusal to cut production. A strong dollar is also pushing prices lower.
One factor that has not affected prices, according to Kloza, is a refinery strike by the United Steelworkers union. Management has kept these refineries up and running despite the strike, so it’s had little impact on gasoline production and prices.
Kloza expects prices to top out at about $2.50 to $2.70 a gallon, before turning lower once again. By this summer or early this fall, he predicted, gas will be back below $2 in many areas.