Gas Prices on the Rise: Extreme Heat and Oil Production Cuts to Blame
Drivers are bracing for higher gas prices in the United States as the national average reached approximately $3.78 per gallon on Tuesday, showing an increase of around 25 cents from just a month ago, according to AAA. Although the current prices are still significantly lower than last year's surge following Russia's invasion of Ukraine, experts find the recent jump to be uncommon.
AAA spokesperson Andrew Gross stated that such price hikes typically require extreme weather events like hurricanes. What makes this situation particularly interesting is that fewer people are traveling this summer compared to previous years.
The surge in gas prices is closely tied to crude oil costs, with West Texas Intermediate crude, the U.S. benchmark, maintaining a price above $80 per barrel since Thursday, reaching over $81 on Tuesday afternoon. This marks a significant $12 increase since July 3, as reported by Tom Kloza, OPIS global head of energy analysis.
The rising gas prices can be attributed to several factors, including global supply production cuts and the impact of this summer's extreme heat on refineries. Here's what you need to know.
Reasons Behind the Rising Gas Prices: The Heat and Production Cuts
The record-breaking summer temperatures are partly to blame for the increase in gas prices. The extreme heat affects refinery operations, which are designed to function optimally between 32 and 95 degrees Fahrenheit (0 and 35 degrees Celsius). The hazardous conditions during temperature extremes lead to production dial-backs for safety, subsequently constraining the supply.
According to Kloza, the Gulf Coast houses approximately 10 million daily barrels of U.S. refining capacity. The heatwave has caused these refineries to operate below their normal capacity, resulting in a loss of hundreds of thousands of barrels each day.
Additionally, production cuts from major oil-producing countries in the OPEC+ alliance have contributed to the price surge. For instance, Saudi Arabia reduced its oil exports by 1 million barrels per day in July, and Russia is also exporting less oil.
High Gas Prices Across Different States
Gas prices vary across the United States due to factors like routine maintenance at regional refineries and limited supplies in some states. On Tuesday, California had the highest average gas price in the nation at $5.01 per gallon, followed by Washington and Oregon at $4.96 and $4.92, respectively. In contrast, Mississippi had the lowest average at around $3.29 per gallon, followed by Louisiana at $3.39 and Alabama at $3.40.
Future Gas Price Projections
Predicting future gas prices is challenging, but experts warn of potential hurricane risks that may impact refineries. Relief from the summer heat is anticipated as fall approaches, but hurricanes can lead to refinery shutdowns, affecting gas prices.
Tips to Save Gas and Money
For those looking to save money and reduce trips to the pump, maintaining proper tire pressure is essential, as low tire pressure can decrease fuel efficiency and increase costs. Other gas-saving tips include using cruise control when possible, not overfilling the tank, and removing unnecessary items from the car's trunk to reduce weight.
As the situation remains dynamic, stay updated on gas prices and potential impacts on your travel plans.
Source: Associated Press (AP)
