A week before travelers hit the road for the Thanksgiving holiday, gas prices in Tampa Bay are surging, up 25 cents a gallon in the past week alone.
The average price per gallon in the bay area was $2.51 per gallon Monday, up from $2.26 per gallon a week ago and 44 cents higher than travelers faced a year ago, according to AAA.
"Our usual autumn pump price plunge was interrupted by rising oil prices," AAA spokesperson Mark Jenkins said in a release. Despite the current highs, "oil prices let off the throttle last week, allowing gas prices to find what appears to be solid ground."
Gas prices were also up statewide, rising from $2.40 per gallon last week to $2.53 per gallon Monday. Average Florida prices did, however, hold steady over the weekend, AAA said. National prices were steadier at $2.56 per gallon, up just 3 cents from last week.
Analysts cited several reasons for the significant, unseasonal increase: higher-priced crude oil; a slight dip in U.S. oil production; and fewer domestic oil rigs in operation. It may not show up at the pump yet, but the price of crude oil has come down recently as nine U.S. rigs were added last week and domestic inventories went up.
"Gas prices typically rise like a rocket and fall like a feather," Jenkins said.
There may be some relief around the corner. The price of crude oil has come down recently as nine U.S. rigs were added last week and domestic inventories went up. Without another increase in crude oil inventories this week, however, prices aren’t likely to drop more than a few cents.
What continues to affect prices, however, is political turmoil in Saudi Arabia. The country produces a significant amount of crude oil, and a leadership change could potentially affect the amount that it exports.
And experts say this week’s price roller coaster is just getting started. Concern over Saudi Arabia will likely make prices "somewhat volatile" this week, according to AAA.
GasBuddy.com, a gas price tracker, points to another potential culprit, too, behind the relatively fast uptick — a trend called "price cyling." That’s when gas stations in an area uniformly raise prices.
"The way it works is that stations are essentially in a mini price war in which they undercut each other by a penny or so every day or two," Patrick DeHaan, GasBuddy petroleum analyst, said.
Keeping prices low, however, eats into the gas stations’ profit margins. So when that becomes untenable (or the price of wholesale gas goes up), one gas station will raise its prices. Other gas stations, wanting to increase their profit margins, will then raise their prices to match the first gas station.
Once everyone’s prices are up, one gas station will drop theirs, undercutting the competition. The other stations follow, and the cycle begins again.
It’s a phenomenon most notable in the Great Lakes region, where the price of gas can vary by several cents in a single day. DeHaan said Florida is still in the early stages of this, but he has increasingly noticed it in recent months. One day last week, for instance, Tampa Bay pump prices jumped by a dime in a single day.
What does all that mean for the upcoming holiday travel week? It’s too early to forecast exact numbers, but AAA’s Jenkins said prices are likely to hover around current levels.
"We’re more than likely to see the highest Thanksgiving (prices) in three years," he said.
Last year, Florida averaged $2.10 per gallon on Thanksgiving day, $2.08 per gallon in 2015 and $2.79 in 2014.
Even if prices remain high, Jenkins doubts it will affect consumers’ travel plans for the holiday. Often, he said, consumers will cut down expenses in other areas to allocate more toward gas.
"Thanksgiving is often a time when people want to be with family," he said. "They’re not going to sacrifice that time just because gas prices are a little more expensive."
Contact Malena Carollo at [email protected] or (727) 892-2249. Follow @malenacarollo on Twitter.