Oil flirts at $50 a barrel as summer driving season approaches

With global oil prices grinding higher, gasoline prices are also drifting up as the Memorial Day weekend and summer driving season approach.

On Thursday, benchmark prices for a barrel of oil briefly pushed past $50 for the first time since last August, a turnaround from January, when oil was trading below $30.

Still, Americans can enjoy the cheapest prices at the pump in 11 years as they go to the beach or the mountains this holiday, saving nearly 50 cents a gallon compared with last year.

The sharp decline in oil and gasoline prices since late 2014 because of a global petroleum glut has partially reversed in recent weeks as wildfires have curbed production in Canada and rebel attacks have disrupted oil exports from Nigeria.

At the same time, oil companies are cutting back production in the United States, Brazil and China because of the recent collapse of oil prices — which remain at levels that are roughly half what they were two years ago.

Declining supplies have led to a near doubling of oil prices since early February to just over $50 a barrel, and for the first time since August, prices for regular gasoline have risen above $2 a gallon in all 50 states.

On Thursday, the average price for a gallon of regular gasoline nationally was $2.31, 5 cents above a month ago, according to the AAA motor club. But that remains 43 cents below a year ago.

In the Kansas City area, the average price for a gallon of regular unleaded Thursday was $2.16 on the Missouri side of the state line, according to AAA. That was down from $2.50 a gallon over Memorial Day weekend a year ago.

On the Kansas side, prices averaged $2.32 a gallon, down from $2.57 last year.

AAA expects 34 million people to drive at least 50 miles this holiday season, the most since 2005. It is part of a broader trend of more road travel as the economy improves. Experts say the Memorial Day traffic is just the beginning of a summer of traffic jams at the nation’s beaches and mountain parks.

“The statistics over the last two years have been dramatic in terms of numbers of increased road trips during the critical holiday periods,” said Bill Sutherland, senior vice president of travel and publishing at AAA. “As the roads become busier, and as the hotels become used, as restaurants fill up, you will want to be sure you have effectively planned out the trip.”

Economists have been generally disappointed that lower gasoline prices have not given the economy a bigger lift over the past year. They originally thought consumers would spend their extra dollars at the mall, but instead many people have saved their extra cash, although others are buying bigger and less efficient vehicles.

The drop in exploration and production in oil and natural gas producing states like Texas, Oklahoma, Louisiana and North Dakota has led to the layoffs of 120,000 workers in high-paying jobs. Scores of companies have gone bankrupt, and experts say the industry will need at least a couple of years to recover.

The depressed state of the industry has been a drag to the national economy — and particularly manufacturers who make the pipelines and drilling equipment — and that has only been partially counterbalanced by lower energy costs.

But economists say that they see a benefit for lower-income people, since they are the ones who spend the highest proportion of their salaries on energy and generally drive older, gas-guzzling vehicles. Some of the states with the lowest gasoline prices, like Mississippi, South Carolina and Arkansas, have a large number of lower-income workers, many of whom drive long distances to work.

This story was originally published May 26, 2016 at 3:07 PM with the headline "Oil flirts at $50 a barrel as summer driving season approaches."