Higher oil prices are coming home to roost for consumers, with gasoline prices up 14 percent in metro Denver since early December and up 23 percent compared to a year ago.
Prices are expected to increase through the year, but not high enough to reverse a trend of rising gasoline consumption.
“Despite higher pump prices, U.S. gasoline consumption is expected to reach a record high in 2017 because of a strong economy and higher employment,” said Adam Sieminski, administrator of the Energy Information Administration in a .
A gallon of regular unleaded gasoline in metro Denver averaged $2.22 on Tuesday, up from $2.20 a week ago, $1.98 a month ago and a $1.80 a year ago, according to GasBuddy.com.
Statewide, a gallon of regular gasoline averaged $2.26 on Tuesday, up from $2.24 a week ago, $2.02 a month ago and $1.83 a gallon a year earlier.
Colorado gasoline prices, however, remain below the U.S. average of $2.37 per gallon. About two-thirds of U.S. gas station now carry regular gasoline at prices over $2.25 a gallon versus only 13.4 percent a year earlier, according to GasBuddy.com
“Oil prices rose sharply after the OPEC decision and gas prices are merely following the rise in oil,” said Patrick DeHaan, a senior petroleum analyst with GasBuddy in Chicago.
DeHaan said the presidential election, which triggered expectations for higher inflation, didn’t impact prices, but the agreement by many of the world’s largest oil suppliers to curtail production has altered prices.
After Houston, Denver had some the lowest gasoline prices of a major metro city last year, while Los Angeles has some of the highest, according to the EIA.
The EIA is predicting that gasoline prices will pivot around $2.50 a gallon this year and next, with rising U.S. crude production helping mitigate against higher oil prices.
“The general decline in U.S. crude oil production that began almost two years ago is likely over, as higher average oil prices and improvements in drilling efficiency are giving a boost to output,” Sieminski said.
Preliminary data show U.S. oil production increased in the final quarter of 2016, the first time that has happened since early 2015.
