Michigan fuel prices spike 15 cents per gallon, reach highest rate since 2014

Michigan motorists are paying an average of 15 cents more per gallon this week than they were last week and can expect prices to climb even higher, experts say. 

AAA auto club in Dearborn said Monday that Michigan drivers are paying an average of $3.17 per gallon for regular unleaded gasoline — the highest price since October 2014.

The cost is 22 cents more than the same time last month and $1.06 more than this time last year, said Adrienne Woodland, a spokeswoman for AAA.

A 15-gallon fill-up is costing drivers an average of $47. That's up about $8 from when prices were their highest in January.

“Higher crude oil prices coupled with tightening gas supplies in the Midwest helped push the Michigan state average to the highest since October of 2014,” said Woodland. “If domestic crude prices remain high, motorists will likely continue to see pump prices fluctuate through the end of the month.”

Metro Detroit’s average daily gas price is $3.19 a gallon, about 10 cents more than last week’s average and $1.07 more than this same time last year. Flint and Ann Arbor had an average of $3.18 a gallon. The least expensive prices in Michigan were reported in Benton Harbor ($3.12); Traverse City ($3.13); and Marquette ($3.14).

Although gas prices will likely remain high, Patrick De Haan, senior petroleum analyst at Gasbuddy.com., which tracks gas pricing in Michigan and elsewhere, doesn’t see it climbing to $4 a gallon. De Haan noted some areas of the nation, like in California, have experienced gas prices at $4 a gallon and higher due to pipeline shutdowns and high demand for fuel.

“Barring extraordinary circumstances I don’t think we will see $4 a gallon in Michigan but then COVID wasn’t forecast either. Four dollars a gallon is possible but not probable," said De Haan. “This has been an exceptional year and there will continue to be exceptional demand for gas in some areas. We may be stuck for $3 per gallon prices for some time.

“There is pent-up demand and Americans are going to use their boats, their RVs and go on summer road trips and travel to their lakefront cottages,” he explained. “People want to get back to normal."

He noted that in April 2020 and early in the “pre-vaccine pandemic days” gas prices dropped with travel restrictions, school shutdowns and people working from home instead of commuting.

“Prices fell and gas companies had no choice and did what any company will do — scaled back production and cut their workforce,” he said. “Now supply is catching up to demand and it’s slowly coming back. Although, we still don’t have the mass five-day, 9 to 5 commute that we once had in some areas. And that may offset pent-up demand (for gas).”

De Haan described gas prices in Michigan, Indiana and Ohio as all following a pattern called “price cycling” which repeats every 7 to 12 days in response to crude oil pricing.

He expects gas prices to remain in the $3-a-gallon range through summer but then start to level out. He also predicted that in some areas, such as roads leading to popular family destinations like Sleeping Bear Dunes or the Manistee National Forest in Michigan or south across the Ohio border to the Cedar Point amusement park, there might be gas stations this summer unable to keep up with demand. De Haan said he wouldn’t be surprised to see some of them run out of gas at times between deliveries. 

In its latest weekly report, new data from the Energy Information Administration (EIA) showed that gas demand dropped, AAA reports. Typically, lower gas demand amid growing stocks would help push pump prices down, but the price of crude has gone up. Crude prices have increased due to optimism that the COVID-19 vaccine rollout will continue to help crude demand recover. In May, the U.S. Consumer Price Index showed that prices increased by 5% compared to last year, an increase larger than expected. The new report is fanning market concerns that inflation is driving prices higher.

mmartindale@detroitnews.com

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