Why Is Gas So High - Again?
Gas prices normally decline after Labor Day - as the summer season ends. However, instead, they are rising. Production cuts by Saudi Arabia, Russia and other oil-producing countries, as well as natural catastrophes are driving prices higher at the pumps.
The national average for regular gas reached $3.88 a gallon, according to AARP so far in September. That’s the highest price since October 2022. During my travels around the city, I see prices as high as $4.09 per gallon at some gas stations.
As we approach the fall, gas prices normally decline through the summer. We’re certainly in different circumstances these days. Here are some reasons why gas prices are still high:
1. The Heat. Heat waves across the Southern States this summer have had a major impact on gas prices. The hot weather in Texas, Louisiana and along the rest of the Gulf Coast has affected oil refineries, hurting their production. Although these big refineries can handle extreme weather, they were not designed to operate at full capacity for extended periods with temperatures near or above 100 degrees.
2. Foreign Oil-Producers. In June, Saudi Arabia, Russia and some other oil-producing countries agreed to slash the amount of oil they pump to the world in a bid to drive up prices. Those cuts, which were initially forecast to last through August, have been extended to September. That means 1.5 million fewer barrels of oil a day is being produced.
3. Demand. Crude oil prices are driven by global supply and demand. Economic growth is one of the biggest factors affecting petroleum products-and therefore crude oil-demand. Growing economies mean a higher demand for energy, in general, especially for transporting goods from producers to consumers. When the production cut was announced, oil was selling at about $70 a barrel, and since then the price has jumped to more than $93 a barrel.
These are some of the reasons why gas prices are still so high. So, when will gas prices come down? Well, there are a lot of unknowns. For one, we are in hurricane season. One bad storm that disrupts oil production can cause gas prices to surge. Another factor we have to take in consideration are the decisions of these oil-producing countries on whether they will continue to cut production.
Barring these unknowns, prices should go down and possibly last through November. During the fall, demand eases and the industry switches to a winter mix of gasoline, which is cheaper to produce. But still, there exist the unknowns.
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