Consumers paid the highest 4th of July gas prices in six years this weekend, with most drivers paying 15-20 cents more per gallon than expected, according to AAA. High prices, however, didn’t deter an estimated 41 million Americans from traveling 50 or more miles, an increase of 1.9% over last year. It appears that prices at the pump won’t be as much of a deterrent to Americans this summer as previously predicted.
Gasoline prices in the U.S. have been rising despite a decline in crude oil prices, which hit a three-week low due to cooling tensions in Iraq and ample supply (according to Bank of America the U.S. has now surpassed both Saudi Arabia and Russia in oil production).
Still, “It takes almost no scare at all to push oil prices up $5 or $10 bucks a barrel,” says Yahoo Finance columnist Rick Newman. “That just tells you that the supply-demand equation is still pretty tight, we just got a little bit of slack in the last few days.”
The ISIS situation in Iraq is at a temporary standstill, but that could easily change and the problem with U.S. oil production says Newman, is that “we don’t have the refining capacity to create tons of extra gasoline. So that’s what limits the supply of extra gas and is going to keep gas prices relatively high.”
According to Newman, “gas prices will probably never go back below $3.00 a gallon; $3.50 might be normal and we’re even used to $4.00.”
More from Yahoo Finance
- Sectors & Industries
- gas prices
- crude oil prices