New York
CNN Business
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Here’s the bad news first: Gas prices are on the rise across much of the United States and could soon reach a national average of $4 a gallon for the first time in two months.
But the good news is that prices may not stay there for long, as they are already dropping in parts of the country where prices are the highest.
The national average price on Monday was $3.92 for a gallon of regular gas. That’s up 12 cents just last week and 24 cents since The 98-day price bracket expired late last month. part of that escalate Followed last week’s decision by OPEC + To cut production by 2 million barrels per day in an effort to raise prices.
In the United States in particular, the price hike is largely due to lower refining capacity. Many West Coast refineries were offline due to accidents or maintenance. Tom Cluza, global head of energy analysis at OPIS, which tracks AAA gas prices, told CNN Business last week that roughly 18% of the country’s refining capacity was offline at the time the OPEC cut was announced.
Now these refineries are back in operation – and the price of gas in Western countries is already falling.
AAA said prices in California, which accounts for nearly 10% of the nation’s gasoline use, have fallen by 5 cents in the past week, even though the state still has the highest average prices in the country at $6.33 a gallon. Prices fell 10 cents in Oregon, which has the third-highest after California and Alaska, to $5.53 a gallon.
“East Rockies prices are on the rise, but prices in the West Rockies are really down now that the refinery outage is over,” said industrial analyst Andy Lebow.
Lipow believes the national average is already nearing a peak in the short term, expecting the average to reach between $3.95 to $4 a gallon later this week before starting to decline again. He said prices east of the Rockies are likely to follow western prices and start falling next week, and that by Halloween the national average could drop to $3.80 a gallon.
Currently, nearly 25% of the country’s 130,000 gas stations sell regular gas for $4 or more, up from about 15% when the price slump ended last month. And 13 states — Alaska, Arizona, California, Hawaii, Idaho, Illinois, Indiana, Michigan, Montana, Nevada, Utah, Oregon, and Washington — have a statewide average above $4 a gallon right now.
Lipow said the OPEC+ cuts are already calculated at current prices, so from now on, oil traders will be looking at demand.
Demand is likely to be affected by the growing fears of Recession, both in the United States And the around the world. Recessions usually reduce demand significantly as fewer people have jobs to move to, and consumers cut back on spending.
Gas consumers typically continue to buy it in the same amount regardless of price—usually out of necessity—making it what economists refer to as an “inelastic” good.
But Lipow said that after the average price in the United States hit a record $5.02 in mid-June, consumers scaled back driving: Consumption fell nearly 6% in July, the heart of the summer driving season.
Lipow added that this winter’s heating bills, which will also be significantly higher than they were a year ago, are likely to cause further reductions.
As he notes, when homeowners adjust their thermostats, they don’t see the dollars and cents. “But at the gas pump, you see the price, and you can decide to cut back on what you spend.”
