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Get ready for the most expensive driving season in years

Alex Veiga, AP Business Writer | 4/30/2018, 7:12 a.m.
Get ready for a little bit more pain at the pump this summer.

Drivers in Western states such as California, Oregon, Washington, as well as Alaska, Hawaii, Connecticut and Pennsylvania, are paying the most at the pump. The average retail price in those states is running from $2.95 to $3.61 per gallon.

Average retail gasoline prices are lowest in a swath of mostly East Coast states, including Florida, New Hampshire, Delaware and Georgia. They're ranging from $2.68 to $2.80 per gallon.

Still, prices remain well off from 2008, when crude oil prices jumped above $130 per barrel and average retail gas prices surged to an all-time high of $4.11 per gallon.

"People forget very, very quickly," Kloza said, noting that the average U.S. gasoline price remains well below where they stood five years ago at $3.60 per gallon.

"We're seeing a higher price environment... but I don't think we're goig to look at really apocalyptic numbers," he said.

The EIA projects that the U.S. retail price for regular gasoline will average $2.74 per gallon this summer, up from an average of $2.41 per gallon a year earlier. Gas prices to rise each spring through Memorial Day and slowly decline as the summer goes along.

For all of 2018, the agency expects that the national retail price for all grades of gasoline will average $2.76 a gallon. That would translate into an additional $190 spent on fuel by the average U.S. household this year compared to last, the agency said.

"At the higher income levels, this won't really have much of an effect," said Behravesh. "But it's a bigger deal for lower-income families, because a bigger share of their budgets goes to things like gasoline."

In broader economic terms, the rise in oil and gasoline prices will help crude producers in states like Texas and North Dakota and will likely boost capital spending industrywide. Spending by oil companies fell sharply as oil plunged below $30 a barrel in 2016, dragging on U.S. economic growth.

Industries that rely heavily on fuel, such as shipping companies, airlines, vehicle fleet operators and other transportation companies, are seeing rising costs, which eventually will be passed on to consumers. Diesel fuel hit its highest national average price in more than three years over the weekend at about $3.06 per gallon. American Airlines said it spent $412 million more on fuel in the recent first quarter than in the year-ago period.

At current levels, U.S. crude oil prices won't noticeably hamper the economy, said Behravesh.

"You would have to get up into the $90-$100 range for it to really have a big impact on growth," he said. "At these levels, it may shave off a tenth of a percentage point off global growth."

One reason oil likely won't get to that level is the emergence of the U.S. as a major global oil producer. Higher prices encourage U.S. oil companies to crank up output.

"That rise in U.S. production and further rises in U.S. production will put a cap or a damper eventually on higher oil prices," Behravesh said. -- (AP)