Topline
National average gas prices reached a five-month high Wednesday, surpassing $3.50 per gallon for the first time since November, following Saudi Arabia’s decision Sunday to drastically cut oil production and as analysts warn rising oil prices and high demand threaten to bring prices back toward record highs last summer—though at least one analyst doubts they’ll return to the dreaded $5 mark.
Gas prices shot up to a five-month high Wednesday, as demand rises and inventories fall.
Key Facts
The national average for a gallon of gas hit $3.51 Wednesday, according to GasBuddy, following a 10-cent spike in prices over the past 10 days, though gas prices are still 65 cents lower than they were a year ago and more than $1.50 off their all-time peak last June.
The jump in prices comes three days after a group of oil producers, including Saudi Arabia Algeria, Kazakhstan, Kuwait, Oman and the United Arab Emirates, announced plans to cut up to 1.15 million barrels of oil per day starting next month and lasting through the end of the year—throwing a wrench in the already volatile international energy market.
GasBuddy petroleum analyst Patrick De Haan said he believes those cuts will cause oil prices to jump between $3 and $6 per barrel, though the change in price motorists pay at the pump could be a marginal increase of 5-15 cents.
Andrew Gross, a spokesperson for AAA, attributed the jump in prices to high demand and rising prices of oil, which is refined into gasoline and diesel, with the U.S. benchmark West Texas Intermediate rising 4.26% year to date to $80.22, and the international benchmark Brent Crude Oil shooting up 2.87% since New Year’s, to $81.32.
In the week ending March 24, gas demand rose from 8.96 million barrels per day to 9.15 million barrels per day, according to the Energy Information Agency, while gas reserves fell over that time from 229.6 million barrels to 226.7 million barrels.
Contra
Despite analysts’ warnings that the combination of high oil prices, rising demand, low inventory and market vulnerability could bring prices toward last summer’s record high of $5.02, one analyst believes that’s an unlikely scenario. GasBuddy head petroleum analyst Patrick De Haan said late last month there’s an “extremely long shot” of gas prices returning to that record and that they might not even hit $4, on average, this summer, writing in a Tweet, “a LOT would have to go wrong” to reach that all-time high.
Surprising Fact
Gas prices are highest in California, where drivers are paying $4.85 per gallon, though they have come down steadily from $4.90 a month ago, according to AAA data. Gas prices had skyrocketed last year in California—which typically leads the country in gas prices—amid tight supplies and several refinery shutdowns, setting a record in Los Angeles last October at $6.49 per gallon (prices in Los Angeles County have since dropped to $4.89). Drivers in Colorado have also seen a drop in prices over the past month, from $3.99 to $3.48. Prices have also fallen over that time in New Mexico, from $4.32 to $4.22, Wyoming ($3.42 to $3.29), Idaho ($3.66 to $3.55) and Arizona ($3.68 to $3.31).
Tangent
Outside of California, the highest prices can be found in Hawaii, where prices average at $4.80, and Alaska ($4.83), followed by Washington ($4.33), Arizona ($4.31), Nevada ($4.22) and Illinois ($3.87), according to AAA. The lowest: Mississippi ($3.06), Arkansas ($3.11), Kansas ($3.14), Missouri ($3.16), Oklahoma ($3.16) and Texas ($3.18).
Further Reading
Gas Prices Hit Two-Month High, Though Experts Doubt They Will Rebound To $5—Here’s Where They’re Most Expensive (Forbes)
Will Gas Prices Hit $5 Again Soon? Analyst Says ‘Extremely Long Shot’ (Forbes)
Source: https://www.forbes.com/sites/brianbushard/2023/04/05/gas-prices-hit-five-month-high-could-they-hit-5-again/