The national average is holding steady at $3.27 per gallon, nearly 25 cents below where it was a year ago. Due to the cold and snowy weather, January fuel demand was reported to be more than 4% below where it was in 2013. This decrease in consumption has kept prices at bay, according to WEX Inc.
Experts predict prices to dip a little further over the next few weeks followed by a spike that could exceed 50 cents per gallon into March, says WEX. This is due to the annual switch to summer fuel spec. The EPA mandates that fuel in the summer must be a special formula for air quality purposes. This formula is harder to make and fewer refineries internationally have the ability to produce it, which limits supply.
In addition, traders always fear there won’t be enough fuel on-hand to meet the increased demand in the summer, which can also drive prices higher.
Meanwhile, diesel prices have been increasing. The winter weather has put a strain on natural gas and many utilities have switched to burning diesel. This has decreased the supply and pushed diesel prices higher, says WEX.