July 13 (UPI) — Travel club AAA said Thursday to be on the alert for elevated retail gasoline prices as broader commodity prices jump in response to production cuts from Russia and Saudi Arabia.
Consumer demand softened in the wake of the July 4 holiday in the United States, which was somewhat of a record-setter in terms of travel. Low demand would normally lead to lower prices, but retail gasoline prices are higher than during the first week of July, at $3.56 per gallon.
“Gas demand has fallen nearly 10% since the holiday, as folks have returned to their day-to-day driving routines,” said Andrew Gross, a spokesman for AAA. “Typically, this would lower gas prices, but such a move is being countered for now by the increasing cost for oil, the main ingredient in gasoline.”
Oil prices were highly volatile during the trading session on Thursday, though the price for Brent crude oil, the global benchmark, was moving in the low $80 range for much of the day. Brent started July closer to $74 per barrel.
Saudi Arabia had opted to trim 1 million barrels per day from its production starting in July, but announced last week it would extend that for another month. Russian Deputy Prime Minister Alexander Novak said Moscow would pledge to cut its own production by 500,000 bpd come August.
Oil prices could in theory reach $100 per barrel this year, though lingering concerns about the pace of growth in the global economy could keep a lid on major gains for the year.
And while retail gasoline prices are on the rise, they’re still lower than this time last year. The price at the pump peaked at $5.01 last June and was $4.63 per gallon this time last year.
