The Chicago Journal

US gas prices to suffer another increase edging to $4

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.

Gas prices

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.

Price drops

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:

  • Alaska
  • Arizona
  • California
  • Hawaii
  • Idaho
  • Illinois
  • Indiana
  • Michigan
  • Montana
  • Nevada
  • Utah
  • Oregon
  • Washington


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.”


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On Wednesday, AAA reported that the national average for regular gasoline fell three cents, and prices dropped to $ 4.16 per gallon.

Falling pump prices continue to relieve people, especially in light of inflation and a shrinking economy.

Fuel prices

The national average price of gas has fallen for 50 consecutive days. However, on June 14, gasoline prices hit an average high of $ 5.02.

Since then, gasoline prices have fallen by 86 cents. Last month, the national average fell 65 cents.

AAA reported that nineteen states have average gas prices below $4, including Ohio, Iowa and Wisconsin.

The factors of the fall in prices

Lower gasoline prices can be attributed to several reasons, from fears of a recession driving down oil prices to less U.S. driving as prices surged above $5 a gallon.

“When people pay, and they see $100 for the bill, they panic and become apoplectic,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service.

The Biden administration’s unprecedented release of emergency oil from the Strategic Petroleum Reserve also played a role.

However, Kloza acknowledged that it was not easy to quantify the impact.

Possibility of further price reduction

Whatever the reason, falling gas pump prices have eased the minds of consumers struggling with high prices for groceries, rent and other necessities.

While the average gas price across the country is $ 4.16 per gallon, Kloza pointed out that high prices in places like California add to the figure.

Meanwhile, OPIS reports that the average price is $ 3.99.

“This series has more room to run,” Kloza said.

The president of consulting firm Lipow Oil Associates, Andy Lipow, expects the national average to drop to $4.10 a gallon within seven to 10 days.

Lipow expects the average Labor Day price to drop to $4.

The oil situation

Oil prices fell on Wednesday, closing at levels not seen since Russia invaded Ukraine.

The losses came as a new government report revealed unexpected increases in crude oil and gasoline inventories, prompting people to worry about their energy needs.

The U.S. fell 4% to trade at $90.66 a barrel. The number is the lowest since February 10, two weeks before Russia invaded Ukraine.

Meanwhile, Brent, the global benchmark, fell more than 3%.

Economic crisis

Oil prices have fallen in recent days and weeks on fears of a global economic slowdown.

Barrels closed at $ 123.70 on March 8. Since then, oil prices in the United States have fallen by about 27%.

Additionally, oil prices fell Wednesday after the U.S. Energy Information Administration said weekly oil inventories rose 4.5 million barrels last week amid expectations of a decline.

Meanwhile, gasoline stocks have also increased slightly.

The oil market recovered on Wednesday when OPEC + announced a deal to slightly increase production starting next month.

According to Rapidan Energy Group, the deal represents the lowest percentage increase in production in OPEC history.


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