Recent gas price hike expected to give way to significant drop after Labor Day

Prices are rising in New Jersey and across the region at gas stations such as this one  in Hoboken where Tofail Ahmed pumps gas. (AP file photo)

Prices are rising in New Jersey and across the region at gas stations such as this one in Hoboken where Tofail Ahmed pumps gas. (AP file photo)

It’s costing more to gas up the car, but an analyst said the recent increase in prices won’t continue much longer.

Prices usually fall in August when refiners know they have enough summer-grade gasoline to finish the season, said Tom Kloza, global head of energy analysis for the Oil Price Information Service in Wall, New Jersey.

But they’ve gone up 6 cents a gallon in a week because of speculation about crude oil production. New Jersey prices average $1.97; drivers in the Wilmington, Delaware, area are paying about $2.07; and Philadelphia-area stations are charging about $2.28.

“This year has been a little bit unusual in that there was an awful lot of hype and a lot of hope related to an OPEC freeze in the last 10 days,” Kloza said Monday. “I think the more that we think about it, the more we realize that’s just not practical. The Saudis are pumping at records levels. Iraq is just about the increase production by 5 percent.”

Kloza said prices at the pump could edge up for another week or two.

“When we get through Labor Day, and this has been a very brisk driving season, we’re going to see gasoline demand drop by about 4 or 4.5 percent,” he said. “And that’s probably going to take some of the gusto out of it.”

Unless a hurricane disrupts production, Kloza said, gas prices could dip 10 to 20 cents a gallon by Election Day.

Furthermore, home heating oil is in plentiful supply, and that should keep prices low.

“Some of the early forecasts are that at least for the portion of the winter that takes place in this year, it’s going to be a very slow start, which is to say warmer than normal,” Kloza said. “So I think cheap heating oil prevails. People should be able to go out and contract for that fuel for $2.50 or less.”

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