Motorists in Georgia and Tennessee saw gas prices increase last week, but not by nearly as much as those in Florida, according to this week's fuel price report from AAA-The Auto Club Group. Since last Sunday, state averages rose 1-cent in Georgia, 4 cents in Tennessee, and 10 cents in Florida.
"Minimal increases at the pump were understandable, because of increased holiday demand and delayed reaction to rising crude prices, but the dramatic increases seen in Florida came a surprise," said Mark Jenkins, AAA spokesman.
"Basic fundamentals didn't change. There have been no reports of supply shortages, and oil and wholesale prices held relatively steady last week. When spikes like this happen, gasoline retailers are often the culprit. All it takes is one company to raise prices in effort to increase profits, then other retailers join in, causing a domino effect of rising prices.
"Gasoline retailers may be seeing the potential to profit as Americans are driving at record levels. The current break-even point is around $2.07-$2.10 per gallon, and prices are well above that. Eventually, some gas stations will reduce prices, in effort to compete with their neighbors, and the domino effect will reverse."
Crude oil held steady last week. The weekly average price of WTI (US Benchmark) was $48.98. While this was only a 4 cent increase from the week before, this is the highest weekly average price for WTI since July 24, 2015.
Despite recent upward movement, seasonal gas prices remain well below those seen in recent years. The average price in Florida of $2.35 is 36 cents less than this time last year, and $1.24 less than two years ago. In Georgia, the state average price of $2.28 is 41 cents less than a year ago, and $1.30 less than this time two two years ago. The Tennessee average of $2.20 is 32 cents less than this time last year, and $1.24 less than last year.
"Florida gas prices have the potential to rise this week depending on the impact of the tropical system moving across the Gulf of Mexico," said Jenkins. "Florida gasoline is predominantly imported by tanker ships from refineries in Louisiana and Texas. If the storm leads to fuel shipment delays, prices at the pump could increase."
The Atlantic Hurricane Season will be a wildcard for gas prices in the coming months. As the 2016 Atlantic Hurricane Season gets underway, attention will be focused on the Gulf Coast region because it is home to over 45 percent of the U.S.’s total petroleum refining capacity. Should any severe storms or hurricanes reach landfall, production, refining and distribution could be impacted. Historically we have seen this lead to spikes in the price at the pump nationwide.
