Average Gas Price Rises to $2.75

By Douglas A. McIntyre Published Jun 1, 7:45AM EDT

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Gasoline prices have reached $2.75, as the price of crude oil has surged. The price of an average gallon of regular nationwide was $2.60 just a month ago. Most evidence shows that the number should go higher in the weeks ahead. Summer driving will be a critical factor in the rise.

Uneven gas prices have hurt some states more than others. The average price of a gallon of regular in California rose to $3.70 recently. In Alaska, Hawaii and Nevada the number hit $3.30, and in Oregon and Utah $3.03. The average price of a gallon of premium is California has hit $3.91. That number could easily breach $4 on the upside, taking the price of gas above the $4 level for the first time in over three years.

Most of the states with high gas prices have one or two things in common. The first is high gasoline taxes and fees. The other is long distances from the largest refineries. Neither of those factors will change for years. So, if oil prices rise another 10%, $4 gas could become a norm in the states that already have high prices.

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The price of a barrel of oil moved above $60 early this month. After falling back slightly, it reached $60 again last week. The number is up from a 52-week low of $47.46, so the increase is 26%, and contraction of fracking, mostly in the Dakotas, may dampen supply further.

The AAA has posted analysis that indicates crude may rise for a number of reasons:

Volatility is expected to continue to characterize global oil prices, with a number of variables potentially impacting the sensitive balance between supply and demand. Geopolitical tensions in the Middle East are persisting, largely due to violence by the so-called Islamic State in Iraq and Syria, which adds a level of risk to regional oil production. At the same time, the strength of the U.S. dollar is improving on the heels of improved inflation data. A stronger dollar makes crude oil relatively more expensive for those overseas, which puts downward pressure on prices. Both factors are likely to influence the global price in the near term and market watchers are closely monitoring the ultimate impact on the global price of crude

Demand for gas between now and Labor Day will hit the highest level of the year. That, in and of itself, will press the price of gasoline up.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.