By Rob Wile
It was the longest streak in declining gas prices since the early months of the pandemic: For 98 straight days this summer, American drivers saw gas prices decline thanks, in part, to lower demand. oil world.
Now, the cut in oil production announced by the OPEC+ group last week has pushed up crude oil prices around the world, sending prices back up at the pump.
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According to the American Automobile Association (AAA), the national average price of a gallon of gasoline rose to $3.92 on Monday.
Prices are likely to continue rising from now on, according to Patrick De Haan, chief oil analyst at gas price tracking group GasBuddy.com.
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“With OPEC+'s decision to cut oil production by two million barrels a day, we have seen oil prices soar 20%, which is the main factor for the national average to rise for a third. week in a row,” he explained in a blog post on Monday.
For the rest of the country, de Haan said he expects prices to rise as much as $0.30 from their September lows, which would put them around $4 a gallon.
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In a note to clients on Monday, Andy Lipow, president of consulting firm Lipow Oil Associates LLC, said he also expects gasoline prices to rise as much as $4.
Lipow also noted that gasoline inventories have plummeted across much of the US as previously lower pump prices increased demand among drivers, pushing prices higher.
Jennifer Quinn fills up her SUV at a gas station in Needham, Mass., on Monday, March 7, 2022. Steven Senne / AP
Low inventories have prompted the Biden Administration to consider banning exports of refined products outside the United States, although no official announcement has yet been made.
Analysts believe such a ban would hurt European allies at a time when their energy prices are soaring due to the war in Ukraine.
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If there is any relief, it will be for West Coast and Midwest drivers.
Refineries in the area have been out of service in recent weeks, but are now about to resume operations.
Once they do, prices there - now the highest in the country - are likely to come down.
Haven at Costco
Also consumers at warehouse shopping clubs like Costco could see more price stability.
On the company's second-quarter earnings call, Costco CFO Richard Galanti explained that the company's gasoline-buying policy allows it to maintain prices when costs rise at other stations.
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Galanti said this is true even if the company temporarily loses money, because it has more security with its members looking for gas from Costco compared to other gas stations that must buy gas in advance and charge a surcharge to increase their profits.
“When prices go up every day, when spot prices go up every day, it costs us a little bit more because we bought it today at a higher price versus four days ago,” Galanti explained.
But for De Haan, from GasBuddy.com, he believes that the current gas price pinch is going to hurt for now: "I don't expect prices to improve much in most of the country."
