Drivers are once again feeling the squeeze at the pump, as the average price for a gallon of regular gasoline in the United States has risen to $3.82, an increase of almost 30 cents from just a month ago.
While gas prices are on the rise nationwide, the steepest increases can be seen in Midwestern states, where the average gas price has gone up by 18 to 25 cents, according to AAA. California and Washington state have the highest gas prices in the country, with an average of $5.00 per gallon. On the other hand, Mississippi has the cheapest gas, with an average price of $3.32 per gallon.
However, it’s important to note that gas prices today are nowhere near as high as they were in June 2022, when they reached a record high of $4.62 per gallon. Back then, gas prices were inching towards $5.00, causing disruptions to Americans’ summer travel plans. Rising gas prices also played a significant role in the inflation surge experienced by Americans last year, according to data from the Federal Reserve Bank of Kansas City.
The national average prices started to decline in mid-August as the summer season came to an end and drivers reduced their time on the road.
Typically, the main cause of rising gas prices is the cost of oil. However, this month, oil prices are only part of the story. Here are three reasons why gas prices are increasing.
Rising mercury
July witnessed some of the hottest temperatures on record in many parts of the country, including Arizona, Texas, and New Mexico. For instance, Phoenix experienced a record-breaking 31 consecutive days of temperatures reaching 110 degrees during the day.
Such extreme heat forced oil refineries to reduce their output, as most of them can only operate within temperatures ranging from 32 to 95 degrees. This reduction in output resulted in higher gas prices, according to CBS News senior transportation correspondent Kris Van Cleave. However, refineries are now returning to normal operations.
Rising oil prices
Crude oil prices have recently been hovering around $80 per barrel, up from around $70 per barrel a month ago. When global oil prices rise, gas prices usually follow suit. The increase in oil prices is partly due to Russia, the world’s third-largest oil producer, deciding to cut production starting in August.
Analysts at UBS, an investment bank, predict that crude prices will rise to $85 to $90 in the coming months due to increasing oil demand.
Falling oil production
Saudi Arabia, the second-largest oil producer, also reduced its oil exports last month. The country reduced its production by 1 million barrels per day in an effort to maintain elevated oil prices. The Saudi Energy Ministry announced that this reduction will continue until the end of September and may even be extended or deepened if necessary.
The Saudis are particularly interested in boosting oil prices to support their ambitious plan, Vision 2030, which aims to transform the Saudi economy, reduce reliance on oil, and create job opportunities for its young population.
—The Associated Press contributed to this report.
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