Why Did Gas Prices Go Up Today? Once again, drivers are experiencing financial hardships when filling their cars with regular gasoline. The average price of a gallon in the United States has increased to $3.82, an increase of almost 30 cents from a month ago.
Why Did Gas Prices Go Up Today?
Typically, when gas prices increase, the main culprit is the cost of oil. However, oil prices are only part of the story, here are some reasons gas prices are going up:
1. Covid Crushed Oil Demand and oil production
Gas prices are not under the control of a single entity, not even the government. First, place the blame on the COVID-19 pandemic, which two years ago drastically disrupted the oil markets.
Their recovery from the harm caused by the virus is still ongoing.
Due to COVID-19 restrictions, the demand for oil was so low that storage facilities for excess crude were full, and traders in oil futures rushed to sell their crude holdings.
Some eventually had to compensate purchasers for releasing them from further oil deliveries. Since then, the pandemic has gradually abated and oil demand—particularly in the United States—has surged.
2. Rising Mercury
For many regions of the country, including Arizona, Texas, and New Mexico, July was one of the hottest months ever recorded.
For instance, Phoenix experienced a record-breaking 31 days with daytime temperatures of 110 degrees.
As many oil refineries can only run at temperatures between 32 and 95 degrees, the high temperatures forced them to lower their output, according to Kris Van Cleave, senior transportation correspondent for CBS News.
He claimed that the decreased output caused gas prices to rise.
3. Escalating Costs For Oil
After hovering around $70 per barrel some months ago, the price of crude oil has recently been around $80 per barrel. Gas prices usually rise in tandem with increases in the price of oil globally.
Russia, the third-largest oil producer in the world, decided some months ago to reduce production beginning in August, which is one reason why oil prices are rising.
4. Decline in Oil Output
The second-largest oil producer, Saudi Arabia, decreased its oil exports some months back as well. To maintain high oil prices, it cut production by one million barrels per day.
This week, the kingdom announced that its decreased output would continue through the end of September.
A few months prior, Saudi Arabia, the world’s second-largest oil producer, also saw a decline in its oil exports.
One million barrels per day were taken out of production in an attempt to keep oil prices high. The kingdom declared this week that its reduced output would last until the end of September.
Will the Price of Gas Drop Soon?
Given the recent increase in oil prices, that may seem counterintuitive.
However, Kelly clarifies that since 2023 began with a high level of utilization of oil refinery capacity, there was a very large price differential, or spread, between the prices of gas and oil;
In other words, refineries were profiting handsomely at the expense of drivers. Although the price of crude oil has remained relatively high, gas prices have decreased as those spreads have now returned to more normal levels.
The conflict in the Middle East and its effect on the price of gas and oil will be closely monitored by analysts. However, the impact is currently unclear.
For example, power bills may reflect the war’s effects more so than gas station prices.
For much of the United States, rising oil prices are making gas prices painful. Experts predict that they will soon experience further relief at the pump as gas prices are finally starting to decline.