The summer driving season is officially underway, and true to form, gas prices are at their highest levels of the year. According to AAA, the national average price of a gallon of gas topped $2.80 per gallon for the first time since Thanksgiving. With this gain, the average price of a gallon of gas is up more than 25% on the year and more than 37% from its YTD low of $2.03 in late January. The table to the right shows the YTD change of the average price of a gallon of gas as of 6/14 for every year since 2005. At 25.2%, this year’s gain ranks as the fifth largest in the last eleven years and 250 basis points (bps) above the historical average of 22.7%. The chart below compares this year’s change in prices at the pump to a composite of the average YTD change for each year since 2005. While this year’s price action just eclipsed the average year to date change, we would note that we are entering the period of year where prices tend to level off, so hopefully that will also be the case from current levels.
The increase in gas prices we have seen in the last several months has no doubt had a negative impact on consumer sentiment, but it is also important to compare where prices were a year ago, and on that score gas prices are still down more than 20%. Now, if we were to see prices rise back to $3 per gallon by July 4th it would certainly have a negative psychological impact, but even at that level prices would still be down 18% y/y.