'Extremely active' hurricane season may lead to late-summer surge in gas prices

By Myra P. Saefong

Colorado State University predicts a higher-than-usual 11 Atlantic hurricanes this year

U.S. gasoline prices at the pump probably aren't too far from their likely peak this year, but a particularly active Atlantic hurricane season could lead to a late-summer surge in fuel costs, analysts warned Tuesday.

On Tuesday, the average national price for regular unleaded gasoline stood at $3.648 a gallon, according to GasBuddy, while AAA pegged the average at $3.644. Gas prices have climbed by nearly 19 cents from a month ago.

Refinery maintenance has slowed output, particularly on the West Coast, and a changeover to more expensive but more environmentally friendly summer-blend gasoline is just starting to impact retail prices in the Mid-Atlantic and Northeast, Patrick De Haan, head of petroleum analysis at GasBuddy, told MarketWatch on Tuesday.

There's also rising demand for gasoline as seasonal temperatures are rising and Americans are getting outside, he said - specifically pointing to spring break, Easter, last week's solar eclipse and other recent drivers.

The cost of oil has also been an obvious factor, with U.S. benchmark West Texas Intermediate crude (CL.1) (CLK24) trading in mid-$80s per barrel, said Andrew Gross, spokesperson for AAA. "That puts a lot of upward pressure on [gas] pricing."

Year to date as of Monday, WTI oil futures are up 19%.

Read: Oil's rally took a breather after Iran's attack on Israel. Is $100 a barrel still in the cards?

Hurricane risks

Gross said gas prices tend to peak in June and July - and may peak again during the Atlantic hurricane season before "steadily dropping in the fall."

This year, Colorado State University's forecast calls for an "extremely active" Atlantic hurricane season.

It predicts 23 named storms this season. Of those named storms, it expects 11 to become hurricanes and, of those, five to become major hurricanes. From1991 to 2020, the seasonal average for named storms stood at 14.4, with 7.2 hurricanes and 3.2 named hurricanes, CSU said.

'Watch out for late summer - hurricane season could cause a late-summer surge if major hurricanes target Gulf Coast refineries.' Patrick De Haan, GasBuddy

"Watch out for late summer - hurricane season could cause a late-summer surge if major hurricanes target Gulf Coast refineries," said De Haan.

The Atlantic hurricane season runs from June 1 through Nov. 30.

As for gas prices in the near term, Gross said prices in April tend to see bit of "stall" between spring-break season and Memorial Day.

That stall is just starting now, so "it will be interesting so see if prices waffle a bit, or keep climbing slowly," he said.

Peak prices

De Haan added that national average gas prices usually mark their yearly peak in the April/May period, so the peak is likely getting close barring unexpected refinery outages - and that may be between $3.75 and $3.85 a gallon.

On Monday, he told MarketWatch that prices in the Mid-Atlantic and the Northeast, including New York, may see prices rise by 20 cents to 50 cents a gallon starting this week and over the next couple of weeks.

He also said that for California, tight supply will continue as some refineries go down for maintenance. California could see more price increases in the coming weeks as a result - perhaps 10 cents to 30 cents a gallon, he noted.

A brief run at $6-a-gallon gas prices in California is "possible before prices cool off in June," De Haan said.

On Tuesday, the average regular unleaded gas price in California was at $5.442, while in New York it was at $3.518, GasBuddy data show.

AAA's Gross pointed out that the Energy Information Administration will release weekly data on gasoline demand Wednesday.

"If demand is really low, that might help take some of the pressure off pump prices," he said.

-Myra P. Saefong

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04-16-24 1419ET

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