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Gas prices rise 5 percent in July, 1st monthly increase since March; gas averages $3.50/gallon
Gasoline is at $3.50 per gallon for the first time this summer after a sharp run-up in July.
The price of gas gained 17 cents per gallon, or 5.1 percent this month. It was the first monthly increase since March. The nationwide average was last at $3.50 per gallon on June 19.
AAA said Tuesday that about 4 cents of that 17-cent gain can be attributed to ethanol costs that jumped 17 percent in July on record high corn prices. Most fuel sold for passenger cars and pickups today is 10 percent ethanol and 90 percent gas.
Drivers had enjoyed a long stretch of declining prices at the pump as oil fell from more than $100 per barrel in March to below $78 by late June. The average price at the pump fell by 60 cents per gallon in about three months. But oil rose 13 percent from its June low on renewed concerns of supply disruptions in the Middle East and the usual increase in demand in the warmer months. Oil ended July at $88.05 per barrel.
AAA said the gain in July was the biggest for the month since the auto club started keeping records in 2000. Many drivers likely remember gas hitting an all-time high of $4.11 in July of 2008, but the price was back to $3.90 per gallon by the end of that month as the global economic slowdown became more ominous.
AAA predicted that gas prices likely will remain flat or climb slightly in August and then fall when the summer driving season comes to a close after Labor Day.
The high price for gas this year was $3.936 per gallon on April 6 when oil topped $100 per barrel. As the global economy weakened in the spring, oil fell nearly 30 percent. Gas eventually dropped to $3.326 per gallon on July 2.
Demand for gas is still weaker than a year ago as consumers watch their spending. Growth in the U.S. economy slowed to 1.5 in the second quarter and the unemployment rates remains stuck above 8 percent. Better fuel economy in the nation's auto fleet has also cut gas usage.