We keep an eye on the price of oil because it goes into so many products and transportation costs, and its movements can give an indication of what might lie ahead for the global economy.
Oil prices – West Texas Intermediate and Brent crude – each rose nearly 3% on Wednesday. WTI continued to rally on Thursday, although Brent fell back slightly. Meanwhile, global crude oil prices have risen about 10% since bottoming out at the start of the year.
Do you know what else is going on? The price of gasoline in the United States averages $3.41 per gallon, according to AAA. More if you're on the West Coast or some other high cost states like Illinois and Pennsylvania.
Why the price increase? Well, it's almost spring. And there are a few other things.
The price of gasoline has risen about 15 cents a gallon since mid-February and more than 30 cents since the beginning of the year. What I could see this morning as the attendant at the local 76 gas station filled my tank.
The gas station attendant told me my gas would be “$3.99 a gallon but would probably go up tomorrow, maybe even today.”
To understand the rise in pump prices, AAA's Andrew Gross said we need to start with the crude oil being pumped out of the ground and delivered to the global market.
“They crossed $80 a barrel this morning, which is a pretty good sign that there will be strong upward pressure on pump prices here domestically.”
Is there something driving up crude oil prices? OPEC is holding back supply.
Meanwhile, Gross said global oil demand is expected to rise this year.
“The outlook for the global economy is brighter. And if economies around the world are doing well, that means oil consumption will increase,” he said.
An economy that hasn't been doing well recently could influence the trend this year.
“The big wild card remains China,” said Third Bridge’s Peter McNally. He added that China's demand was “disappointing.”
“And if China picks up and oil supplies don't respond, then you're looking at higher oil prices, which will impact gasoline prices,” he said.
They are likely to continue to rise due to the seasons anyway, said AAA's Gross. The days are getting longer, the weather is getting warmer.
“We see this every year, starting about now. “Gasoline prices tend to peak in June and July,” he said.
“What we as consumers tend to forget until higher spring prices come and annoy us,” said Nationwide Financial economist Oren Klachkin.
“The price of gas is one of the few things we all pay attention to every week or so when we fill up and are most sensitive to,” he said.
And what, he said, has depressed consumer sentiment.
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