AAA: Consumer demand could drive gas prices higher

Motor club AAA warned that consumer gasoline prices in the United States could be on the rise given signs in government data of robust demand.

The U.S. Energy Information Administration reported earlier this week that demand for gasoline for the week ending July 27 was 1,000 barrels per day short of setting an all-time record. So far, consumer demand for gasoline is about 1.5 percent higher than last year, while gasoline supplies have moved lower.

"If demand remains robust amid dwindling stocks, motorists are likely to see pump prices continue to increase throughout the summer," a statement from AAA read.

AAA reports a national average retail price of $2.87 for a gallon of regular unleaded, a slight increase from Wednesday and about three quarters of a percent higher than last week. The average price for a gallon of gas on this date last year was $2.33 per gallon.

The U.S. economy is growing at a fast clip and unemployment levels remain low. A gauge of consumer sentiment for July from the University of Michigan showed optimism was higher than last year.

"Despite the expectation of higher inflation and higher interest rates during the year ahead, consumers have kept their confidence at high levels due to favorable job and income prospects," Richard Curtin, the surveys chief economist, said in a statement last month.

The EIA in a report published Wednesday said refinery inputs in the United States are at their highest level since it started recording that data in 1990.

"U.S. refineries are running at record levels in response to robust domestic and international demand for motor gasoline and distillate fuel oil," the report read.

The U.S. Federal Reserve on Wednesday said the economy was strong on the back of positive labor figures and an inflation rate hovering around its target of 2 percent, though it left its key lending rate stable for now.

The surge in consumer demand for gasoline comes despite steep hikes in prices. The Organization for Economic Cooperation and Development said inflation among member states increased 0.2 percent from May to June. Energy prices increased 10.4 percent last month, compared with 9.1 percent in May.

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