Gas prices back on their way to $3 a gallon

Gasoline prices have jumped a penny a day on average locally during the past two weeks, which seems to portend another summer of paying more than $3 a gallon.

With the recent rise, the local average for regular unleaded already is 34 cents above this time a year ago. If prices continue on the same trajectory as last year, that would mean they would peak by the end of May around $3.50 or more.

But industry experts say the peak may fall well short of that level, making driving cheaper this summer than last year.

That’s down the road, however. For the next few weeks, local motorists can expect to see more volatile changes in prices.

The average price of regular unleaded fuel increased from $2.51 on Feb. 22 to $2.65 as of Thursday in the central Puget Sound area, according to AAA’s daily tracking service. During the same period, the average price nationwide jumped 22 cents.

“We’re seeing prices move pretty dramatically on the West Coast, and certainly very decisively in California,” said Tupper Hull, spokesman for the Western States Petroleum Association. “There have been some supply issues in California that appear to have had some influence.”

In Snohomish County, fuel selling for less than $2.50 a gallon has become rare in recent days. A drive-by survey of stations in Everett, Marysville and Lake Stevens on Thursday found a low of $2.52 at the Arco station on N. Broadway in Everett and a high of $2.80 at two stations. Among 25 stations, the average for regular unleaded was $2.66.

With the roaring in of March, prices tend to gain momentum every year, said Janet Ray, spokeswoman with AAA’s regional office in Bellevue.

“One of the triggers is this is when we go through the changeover from winter-grade to summer-grade gasolines,” Ray said. “That seems to stress the supply every year.”

That switch in blends and seasonal maintenance at refineries in Western Washington means there’s little margin for error in the supply-and-demand balance, added Tom Kloza, chief oil analyst for the Oil Price Information Service.

But Kloza said there’s another factor at work right now that is pushing up regional fuel prices: speculation. Market traders who bet on where fuel prices are headed have pushed California’s wholesale price for gasoline up by more than 30 cents in a week, he noted.

That’s pushed retail prices above $3 a gallon in parts of California, Hawaii and even New York.

But, Kloza said, the spiral of speculation that’s driving the West Coast prices is bound to sputter out. For that reason, he’s not predicting much higher prices than last year.

“Retail prices are certainly going to increase through the rest of March, but we may see an earlier peak than normal,” he said.

The Energy Information Administration’s forecasts agree with Kloza, predicting the average price of fuel in the U.S. will be $2.60 this summer, about 20 cents below last summer’s national average.

The agency noted that production cuts by OPEC members, cold winter weather across the nation and a continued upward trend in global demand for oil have contributed to recent price increases.

At Hogland Transfer Co., an Everett trucking company, president Steve Holtgeerts said he’s bracing for higher diesel prices, which haven’t moved upward at the same pace as gasoline in recent weeks. On Thursday, the local average for diesel was $2.87.

“It hasn’t jumped a whole lot in the last month, but based on what I’m seeing in California, I expect it to go up next week,” he said.

Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.