Gas prices have suddenly jolted higher, as excessive heat and production caps have hurt supply.
The US average for regular gasoline climbed another two cents on Thursday to $3.71 a gallon, according to AAA.
That’s the highest level since mid-November 2022. Pump prices have now jumped by roughly 12 cents in the span of just three days.
Gas prices remain well below the painful levels of last year. Following Russia’s invasion of Ukraine and the spike in oil prices, gas prices hit a record of $5.02 a gallon in June 2022.
Still, there has been a significant shift higher in recent days after a long period of stable prices.
According to AAA, gas is now selling at an average of $3.80 or above in thirteen states, including Pennsylvania, Colorado, Illinois, Nevada and Arizona. California and Washington are just cents away from the $5 mark.
The sudden spike is being driven in part by a jump in oil prices, which are sitting at three-month highs as recession fears fade and OPEC cuts production. Saudi Arabia and Russia are intentionally holding back supply in a bid to lift prices – and that strategy is starting to work.
Another significant problem: Some refineries, including at least one ExxonMobil facility, had to undergo unscheduled maintenance in recent days. Analysts say extreme heat is sidelining some refinery activity, limiting supply of gasoline, diesel and jet fuel.
The timing is terrible for drivers, because demand is high right now amid the summer travel season. Gasoline inventories are sitting at their lowest level for July since 2015, according to GasBuddy.
Bank of America on Wednesday warned the oil market will move into a supply deficit of about 1.1 million barrels per day during the second half of this year. That’s why the bank continues to expect Brent oil, the world benchmark, to average $90 a barrel next year, up from $83 today.
The jump in gasoline prices, if sustained, could complicate matters for the economy by undoing progress on the inflation front and eroding rebounding consumer confidence.
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