A few factors are causing oil prices to rise, analysts say, including impacts of this summer’s extreme heat on refineries and global supply production cuts — notably from Saudi Arabia, which on Thursday extended its unilateral reduction of 1 million barrels a day through the end of September. Here’s what you need to know.
WHY ARE GAS PRICES RISING? BLAME THE HEAT AND PRODUCTION CUTS
While relief from the heat can hopefully be expected as we enter the fall, both Gross and Kloza pointed to risk of hurricanes — which, of course, leads refineries to power down.
Mississippi had the lowest average at about $3.33 per gallon, followed by nearly $3.44 in Louisiana and and $3.45 in Alabama.
WILL GAS PRICES CONTINUE TO CLIMB?
One important habit is staying on top of checking your tire pressure, Gross said. In addition to safety risks, low tire pressure is “not maximizing your fuel efficiency,” costing you more money down the road, he said.
“If you could guarantee we’re not going to have tropical storm force or hurricane winds in the Gulf of Mexico, I’d say it’s going to be clear sailing for the rest of the year. But that’s a real fly in the ointment,” Kloza said, pointing to the unprecedented water temperatures the region has seen recently.
HOW CAN I SAVE GAS?
If you’re looking to save money and cut back on trips to the pump, there are a few ways you can maximize your mileage per gallon.
On Thursday, according to the AAA, California had the highest gas prices in the nation at an average of $5.03 a gallon. Washington and Oregon followed at about $4.99 and $4.64, respectively.
AAA offers additional gas saving tips — which include using cruise control when possible, not overfilling your tank at the pump and removing unneeded items in your car’s trunk to cut down on excess weight.
The Saudi reduction comes as other OPEC+ producers have agreed to extend earlier production cuts through next year. The cuts aren’t OPEC-wide, Gross noted. As inflation eases, he suspects that better economic prospects may also be putting pressure on oil worldwide.
WHICH STATES HAVE THE HIGHEST GAS PRICES TODAY?
As always, certain parts of the U.S. are facing higher gas prices than others — due to factors ranging from routine maintenance at regional refineries to limited supplies in some states.
Beyond the heat, Kloza pointed to crude supply cuts from major producing countries in the OPEC+ alliance — noting both Russia and Saudi Arabia, for example have been exporting less. In July, Saudi Arabia started reducing how much oil it sends to the global economy by 1 million barrels each day — and on Thursday, in a move widely-expected by analysts, the country extended that unilateral reduction through the end of September.
“While the heat may be keeping people home, it’s also keeps refineries from making refined product,” Gross explained, noting that refineries are typically designed to operate between 32 and 95 degrees Fahrenheit (0 and 35 degrees Celsius). “They don’t like temperature extremes because they’re inherently dangerous places… So they dial back the production for safety purposes, but that then constrains supply.”
This summer’s record temperatures are partly to blame for the rising gas prices.
The national average for gas prices stood at about $3.82 a gallon on Thursday — about 29 cents higher than that seen one month ago, according to motor club AAA. While today’s prices at the pump remain far lower than they were last year, when energy costs soared worldwide in the months following Russia’s invasion of Ukraine, experts say such a jump is unusual.
Still, “the fact that some refineries are struggling has meant that the ones who are able to operate are making really nice profits,” he told The Associated Press earlier this week. Today’s U.S. domestic demand is about 9 million barrels a day, about a half a million below expectations for peak summer months, but the country is exporting a lot of gasoline, he added.
NEW YORK — U.S. gas prices are continuing to rise — giving drivers across the country another headache at the pump.
According to Kloza, there are about 10 million daily barrels of U.S. refining capacity on the Gulf Coast. The heat wave has caused those refineries to operate below normal capacity — resulting in a loss of hundreds of thousands of barrels each day, he said.
It’s hard to know what gas prices will look like in the coming weeks, experts say.
The rising prices are especially interesting as “fewer people are fueling up” their cars this summer compared to years past, AAA spokesperson Andrew Gross explained in an interview this week.
In the U.S., gasoline prices are highly dependent on crude oil — which has also climbed over recent weeks. West Texas Intermediate crude, the U.S. benchmark, traded over $81 a barrel Thursday afternoon. That marks a $12 jump since July 3, according to OPIS global head of energy analysis Tom Kloza.