As forecast, retail gas prices increased slightly last week after Congress reached a deal to raise the debt ceiling and reopen the federal government. Experts say that the jump at the pump was premature, however, and that rates are likely to plateau in coming weeks.
“Many motorists saw pump prices bottom out near $3 a gallon last week, only to jump upwards of 15 cents overnight after the government shutdown ended,” said Jessica Brady, a AAA spokeswoman, in the auto club’s weekly fuel update for Georgia. “The uptick in prices is likely to be short term, and motorists may see them head back down as we close out the month of October.”
Aside from the government’s reopening, Brady said, there aren’t many other factors placing upward pressure on prices, which nationally increased 1 cent from last week to an average of $3.35 per gallon of regular unleaded gasoline.
Georgia’s and South Carolina’s averages – $3.30 and $3.15, respectively – are both up 6 cents from a week ago.
The optimism about the end of the partial government shutdown was met with “bearish fundamentals” that will help to keep gas prices from spiking further, Brady said.
U.S. fuel inventories increased 6 million barrels during the second week of October, a sign demand has not picked up, according to the American Petroleum Institute. The value of the dollar also fell to an eight-month low, which has an abrupt effect on oil prices.
The cost for a barrel of oil closed Friday at $100.81 on the New York Mercantile Exchange – $1.21 less than the week before.
As the market corrected itself with the end of the shutdown, prices in South Carolina increased slightly Monday since reaching a 2013 low two weeks ago, said Angela Daly, a AAA Carolinas spokeswoman.
Since reaching a summer high of $3.34 on July 21, spurred by concerns over the conflict in Egypt, gas prices have been steadily falling. On Oct. 11, South Carolina averaged $3.09 per gallon, compared with $3.25 a month earlier and $3.51 the year before.
“Falling gas prices is great news for drivers,” said David E. Parsons, the president and CEO of AAA Carolinas. “We expect prices to continue trending downward, barring any major supply or distribution issues, such as tensions in the Middle East or a hurricane in the Gulf of Mexico.”
Parsons said the dramatic drop in gas prices was a result of decreased demand because of the end of the summer driving season, refineries’ switch to cheaper winter fuel blends and lower crude oil prices.
The federal government shutdown also pressured prices downward, as furloughed workers weren’t commuting to jobs, resulting in even lower gas consumption. The Carolinas are both serviced by the Colonial Pipeline, which transports refined petroleum products up the East Coast, Parsons said.
AAA expects that gas prices will continue to drop between now and Thanksgiving, typically the most heavily traveled four-day holiday and often a time when prices stabilize or rise slightly.