TAMPA, Fla. - As forecast, retail gas prices moved higher last week after the government struck a deal to reopen and raise the debt ceiling. However the jump in pump prices was premature and it's likely they will plateau in the coming weeks.
The optimism about the government reopening was met with bearish fundamentals that will help to keep gas prices from spiking further. U.S. fuel inventories jumped 6 million barrels during the second week of October, a sign demand has not picked up, according to the American Petroleum Institute. The value of the dollar also fell to an 8-month low, which has a bearish effect on oil prices.
"Many motorists saw pump prices bottom out near $3 a gallon last week, only to jump upwards of 15 cents overnight after the government shutdown ended," said Jessica Brady, AAA spokeswoman, The Auto Club Group. "The up tick in gas prices is likely to be short term and motorists may see them head back down as we close out the month of October. Aside from the government reopening, there aren't many other factors placing upward pressure on prices."
The cost for a barrel of oil closed last Friday at $100.81 on the NYMEX - $1.21 less than the week prior.
The national average price of regular unleaded gasoline is $3.35, 1-cent more than last week. Florida's average of $3.33 rose 4 cents, while Georgia's average of $3.30 increased 6 cents. Tennessee's average of $3.18 increased a cent from last week.