Image source: Marca
Although gasoline prices have only recently fallen, they are expected to rise in the United States and could reach a national average of $4 per gallon.
Despite the disturbing news, there is a bright side as prices are unlikely to stay there for long.
In areas where they are high, gas prices are already falling.
On Monday, the national median price for a gallon of regular gasoline was $3.92.
The price is up 12 cents over the past week and 24 cents since ending the 98-day price decline late last month.
The increase is partly due to OPEC+’s cutting production down by 2 million barrels per day to raise prices.
In the United States, the high prices are due to reduced refining capacity, as several West Coast refineries were previously out of service due to accidents or maintenance.
According to Tom Kloza, global head of energy analysis at OPIS, nearly 18% of the country’s refining capacity was offline when OPEC announced the cut. OPIS tracks gas prices for AAA.
With refineries coming back online, gas prices on the west coast of the United States are already falling.
According to AAA, prices in California, which account for nearly 10% of the country’s gas consumption, fell 5 cents last week.
However, at $6.33 per gallon, the state still has the highest average gas price in the United States.
Oregon has the third highest price after California and Alaska, but prices also dropped 10 cents to $5.53 a gallon.
“East of rockies prices have been rising,” noted industry analyst Andy Lipow.
“But west of Rockies, the prices are already falling now that the refinery outages are ending.”
Lipow speculates that the national average is close to the peak in the short term.
This week’s average is also expected to hover between $3.95 and $4 a gallon before it starts to drop again.
Andy Lipow said that prices east of the Rockies are likely to follow western prices and start falling next week.
By Halloween, he thinks the national average could drop to $3.80 per gallon.
Prices across the United States
About 25% of the 130,000 gas stations in the United States currently sell regular gasoline for $4 or more.
The numbers are down 15% since the end of last month’s price drop.
Thirteen states currently have national averages above $4 per gallon, including:
According to Lipow, the OPEC+ cut is already priced at current prices, so oil traders will be “looking ahead to demand.”
Demand is likely to suffer from rising recession fears that have increased in the United States and around the world.
Recessions typically reduce demand because fewer people have jobs to commute to and consumers limit overspending.
Gas is a necessity that consumers buy, regardless of price, in what economists call an “inelastic” good.
However, Lipow pointed out that consumers are driving less after the US average price hit a record high of $ 5.02 in mid-June.
Consumption dropped by nearly 6% a month later.
He added that winter heating bills, which will be higher than last year, will likely lead to even greater reductions.
Andy Lipow also noted that homeowners don’t see the monetary value when adjusting their thermostats.
“But at the gasoline pump, you do see the price, and you can decide to cut back on what you spend.”