Crude oil today is selling at the highest prices of the year so far, but don’t panic. The prices, around $68 per barrel, are still only half of what they were last year. And prices are going up because it’s that time of year.
Demand for petroleum-based motor fuel, including gasoline and diesel, is higher in June and July because it is the peak of the world’s agricultural season and at the same time, more people go driving in North America and Europe. Demand is not as high as it was last year because not so many people are driving to work, especially in the United States. A switch to more fuel-efficient cars has also started to chip away at demand.
Gasoline prices around $2.55 per gallon might be uncomfortable for U.S. consumers, but they might also be close to the highest levels we see this year. Last year, prices went up so sharply that they peaked early, at the beginning of the summer season. This year, prices have edged up more gradually, so they probably have not peaked yet, but they could be close. Assuming production is not disrupted by severe weather during the hurricane season, oil and gasoline prices might not go up much higher.