Analysts say no relief in sight for higher gas prices before July

• The average price for a gallon of gas has hit $2.96 a gallon.
• Farmington drivers are paying the most in the state at $3.15 a gallon.
• The national average is $3.07 per gallon.

FARMINGTON — Just as they have for most of 2021, gas prices rose again in New Mexico last week, hitting an average price of $2.96 for a gallon of regular unleaded fuel, according to a weekly analysis of prices provided by AAA Texas/New Mexico.

The good news for Farmington drivers, who have been paying the highest gas prices in the state for most of the year, is that prices remained steady here, continuing to average $3.15 a gallon as they did last week.

Drivers in Las Cruces were paying the least for gas among the state's four metropolitan statistical areas, according to AAA, at $2.89 a gallon. The average price in Albuquerque was $2.92, and the average price in Santa Fe was $2.98. The national average was $3.07 – up from $3.04 a week earlier.

Gas prices continue to be considerably higher than they were a year ago, which AAA has attributed to higher demand because of an easing of COVID-19-related restrictions and increased crude oil prices.

The New Mexico average price of $2.96 a gallon is $1 more per gallon than the average price in the state on June 10, 2020. The price in Farmington is $1.15 a gallon higher than on that date in 2020.

With the summer driving season having just gotten underway, AAA analysts said prices likely haven't peaked yet.

"At this point, it looks like they going to inch up," said Daniel Armbruster of AAA Texas/New Mexico.

Armbruster noted the price of West Texas intermediate crude has increased to more than $70 a barrel for the first time since October 2018. AAA reports that the price of crude oil accounts for more than 50% of the price of gas at the pump, meaning that when oil prices rise, there is a corresponding increase in gas prices.

"That's certainly going to help keep prices at where they are now if not higher," Armbruster said.

This week's increase in prices came despite a slight drop in demand for the most recent reporting period, which represented the week ending May 28. Demand had hit 9.48 million barrels a day for the week ending May 21 before dropping to 9.15 million barrels a day for the following week.

But Armbruster said demand likely surged the next week, which included Memorial Day weekend, when tens of millions of Americans were expected to hit the road.

AAA began forecasting an increase in demand late last year, and Armbruster said figures over the last six months have proven that prediction accurate.

"We're getting back closer to normal demand readings," he said, referring to the level of American gas consumption before the pandemic. "Demand is expected to keep picking up ass we go through the summer."

While prices are expected to continue to increase until July, drivers could begin to see some relief at that point, he said. The Organization of Oil Producing States and the Russians announced last week they intended to gradually increase production then, meaning prices could begin to come down at that point.

But Armbruster cautioned that price decrease isn't a given, considering the other variables that could impact the market.

"We're going into hurricane season, and East Coast refineries could be impacted," he said. "That could cause prices to go up, as well."

Mike Easterling can be reached at 505-564-4610 or measterling@daily-times.com. Support local journalism with a digital subscription.