August Gasoline Prices at Seven-Year High

U.S. gasoline prices rose an average of 8.75% a gallon in August to $3.69 a gallon. The price hike is the largest for the month of August in seven years according to the AAA. The highest average price that U.S. drivers have ever paid for gasoline in August was $3.77 a gallon in 2008.

Over the past two months, prices have risen on 53 of 60 days according to the AAA, from a low of $3.33 a gallon on July 2. For the full year to date, gasoline has averaged $3.62 a gallon, slightly more than the $3.56 a gallon average in the same period a year ago.

AAA attributes the rise to the rising cost of crude oil, supply problems due to refinery and pipeline problems, and refinery closures in advance of Hurricane Isaac.

The organization also predicts that gasoline prices for the Labor Day weekend will be the highest ever for that holiday, however prices are expected to drop following the holiday as refineries come back online, the summer driving season comes to an end, and refineries transition to making less-costly winter-blend fuels. But the drop is not expected to be substantial:

While prices should drop in September barring any major developments, we expect gasoline to remain at or near-record highs through the end of 2012.

At the end of August, seven U.S. states suffer from gasoline prices above $4 a gallon: Hawaii, California, Illinois, Michigan, Washington, Connecticut and Oregon. On July 31 only Hawaii had gasoline prices above $4 a gallon.

The AAA announcement is available here.

Paul Ausick