Just as gas prices began to stabilize, consumers are about to see them start to rise again.
New data from AAA showed that the national average for gasoline is now $3.71 per gallon, an increase of $0.13 from one week prior. In California, the average is even higher, at $4.93 per gallon, up $0.04 over a week ago.
Andrew Gross, spokesperson for AAA, said in an interview with Yahoo Finance, “It’s been notable. The driving factor has been the cost of oil.”
Behind the rise in prices, crude has begun to move up. West Texas Intermediate crude futures rose to $80 per barrel, the first time since April it has seen that level.
Andy Lipow of Lipow Oil Associates said in an interview, “Crude oil prices are up $10 per barrel over the last month. That is equivalent to a 25 cent per gallon rise in gasoline raw material costs.”
Over the past year, the largest oil producers have been implementing output cuts in an effort to stabilize crude prices, which have been steadily inching downward. Although OPEC has not fully implemented all of the production cuts it has announced, Lipow said, “the amount that they are cutting in August is substantial—probably closer to 3.3 million barrels per day. It’s a lot.”
In addition, some refineries have been forced to cut their production rates on gasoline and diesel due to the extreme heat in some areas of the US. Also some analysts note, as we head into hurricane season, those interruptions could increase should a major hurricane hit the US.
These reductions in supply are running into shorter inventories, where in the US gasoline inventories are 4% lower that they were one year ago, which is pushing prices further upward.
Lipow said, “What does this mean for the consumer: I expect the national average to rise another 5 to 10 cents per gallon” in the near future.
Although gas prices have been moving up, they are still lower than they were at this time last year. One year ago, a gallon of gasoline cost $4.30 according to the national average, which is $0.59 higher than today.
In June of 2022, West Texas Intermediate futures passed $120 per barrel, as inflation was peaking.
