This is not supposed to happen at this time of year.<\/p>\n
At a moment when gasoline prices are usually heading down, the reverse is happening. Prices are soaring amid a spike in the price of oil, which is refined into gas for cars.<\/p>\n
Normally, prices ease after the end of the summer travel season as vacationing Americans go back to school and work.<\/p>\n
This time, though, the upward pressure on prices as a result of the increase in oil is causing pain at the pump.<\/p>\n
I dont think were going to see much of a decline this fall like we usually see, said Patrick De Haan, head of petroleum analysis for fuel-savings app GasBuddy.<\/p>\n
The national average price of gas has been at a seven-year high in recent days. As of Thursday morning, it was $3.30, up from $3.24 a week ago, $3.18 a month ago and $2.18 a year ago, according to AAA.<\/p>\n
That means it costs $13.44 more to fill up a 15-gallon tank today than it did at this time in 2020. Thats more than $50 a month in additional costs for anyone who fills up weekly.<\/p>\n
Blame it on the price of oil, which is trading at about $80 a barrel. Thats up from the low $60s at one point in August and the low $70s in September.<\/p>\n
De Haan predicted that gasoline price would rise by another few cents a gallon in the coming days.<\/p>\n
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Heres what you need to know about rising gas prices:<\/p>\n
The Organization of the Petroleum Exporting Countries recently met and decided not to increase oil production as a way to build up supply and therefore lower prices amid the global economic recovery.<\/p>\n
That means key members of the oil cartel, like Saudi Arabia, wont be extracting more oil from the ground, keeping global supplies low and prices higher.<\/p>\n
To be sure, OPECs influence over the global oil market has declined in recent years amid a surge of production in the U.S. and elsewhere.<\/p>\n
Story continues<\/p>\n
But U.S. producers havent increased production quickly because they fear that investments in fossil fuels could prove to be a poor use of their resources, De Haan said.<\/p>\n
The (Biden) administration has made it plain and simple that they are going to be pushing a very, very accelerated time schedule to get off fossil fuels, he said.<\/p>\n
A global spike in natural gas prices is causing some energy companies to consider switching to oil to generate heat this winter.<\/p>\n
That unexpected increase in demand is reverberating through the supply chain and affecting the price at the pump.<\/p>\n
That demand to turn a bigger share of petroleum into hearing oil comes as oil production has lagged far behind, De Haan said.<\/p>\n
In some areas of the country, the spike in gas prices is eye-popping.<\/p>\n
California is Exhibit A. The states average per gallon was $4.46 on Thursday, up $1.26 from a year ago.<\/p>\n
In the San Francisco area, it was $4.65.<\/p>\n
California and San Francisco specifically may spend a record amount of time at these prices, De Haan said.<\/p>\n
De Haan said he does not believe the state or San Francisco will reach an average of $5 this year. But he did not rule it out for 2022.<\/p>\n
Thats a topic that could come up for next spring and summer depending on if any of these supply chain issues get resolved, he said.<\/p>\n
The average price at the top 10% most expensive stations was $4.20 last week, compared with an average of $2.77 at the cheapest 10%, according to GasBuddy.<\/p>\n
President Joe Biden is frustrated at rising gas prices, and the Department of Energy is considering releasing crude oil from the U.S. Strategic Petroleum Reserve, a massive government supply of crude set aside for emergencies. The goal is to help ease prices.<\/p>\n
But that might not have a big impact. Goldman Sachs analyst Damien Courvalin estimated that such a move would lead to a $3 decline in the price of a barrel of oil.<\/p>\n
In the end, the pain at the pump may be temporary.<\/p>\n
While oil production hasnt ramped up much yet, it will likely catch up next year, according to a report by research firm Fitch Solutions.<\/p>\n
We think that growth in crude oil supply will soon outpace that of demand and that the (price of) crude oil will fall in 2022, the group reported.<\/p>\n
Fitch forecasts that the average price of Brent crude, the global benchmark, will be $67 in 2022.<\/p>\n
You can follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey and subscribe to our free Daily Money newsletter here for personal finance tips and business news every Monday through Friday morning.<\/p>\n
This article originally appeared on USA TODAY: Gas prices rise: Oil prices lead to increased fuel costs<\/p>\n
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Read the original:<\/p>\n
Gasoline prices usually fall this time of year as vacation season ends. So why are they jumping? - Yahoo Finance<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" This is not supposed to happen at this time of year. Continue reading