GasBuddy Heat Map
Evaluating last week's prediction for this week, I said "I expect that by next Monday, we'll see that U.S. national average fall to $3.08/gallon, while prices in Canada will fall to 112.5c/L." Looking at our latest GasBuddy pricing data, we show the U.S. average at $3.088 per gallon while prices in Canada are coming in at 112.1c/L. While it was a very close prediction, prices in Canada dropped faster than expected which was very welcome!
This week there are a few things aligning that will result in higher prices at pumps. First of all, the situation in Egypt is threatening stability in the Middle East. While there is no imminent danger yet, markets are concerned that the unrest may spread. We've seen oil prices rally from $86 to over $90 just on the situation there. Gasoline futures have also followed higher, hitting new highs.
If the situation doesn't ebb quickly, we're likely to see gasoline prices continue to rally ahead of the traditional spring rally, which would mean a double whammy for motorists. If the situation is resolved quickly, it could take the air out of the balloon and stop the rally while also slowing the springtime rally.
The situation easily requires close monitoring- especially since Egypt sits next to the Suez canal, the waterway used for oil carrying vessels to make deliveries to North America and Europe.
Closer to home in the U.S., we have a major winter storm that is beginning to form that will tear through the plains before hitting the Great Lakes and East Coast. That storm could cause a temporary drop in gasoline demand, which would help ease rising pressure on gasoline prices, but the storm track remains to be seen.
Overall, the situation in Egypt is grim, and I believe we may see the rally in oil prices fizzle unless there is new news. However, pump prices still have catching up to do with the rally late last week. By the time I'm on vacation next week, the national average will have risen to $3.12 in the U.S. and 113.6c/L in Canada.