Gasoline costs within the US are steadily rising once more, leaving prospects of a $3 nationwide common within the rearview mirror.
As of Feb. 15, the nationwide common fuel value stood at $3.28 per gallon, up $0.12 from per week in the past, in keeping with AAA information.
A shutdown on the massive refinery in Indiana which usually processes 435,000 barrels of crude per day, has impacted costs within the Midwest and pushed up the nationwide common.
Increased oil costs and up to date drawdowns in gasoline stockpiles have additionally put upward strain on driving gasoline prices for drivers throughout the US.
Whereas the nationwide common remains to be about $0.14 decrease than a yr in the past, some states have have seen outsized upward actions just lately.
Costs on the pump jumped a mean of $0.19 or extra over the previous week in New Mexico, West Virginia, Colorado, Maryland, Virginia and Illinois.
The markets with the most costly gasoline contains Hawaii at $4.70 per gallon adopted by California at $4.65 per gallon.
“We’re in that point of yr the place pump costs start to warmth up, often peaking round July,” AAA spokesperson Andrew Gross mentioned just lately.
“However except one thing shocks the worldwide oil market and causes costs to spike, the nationwide common for a gallon of fuel will in all probability stagger increased, with some flat days and even small value dips alongside the way in which.”
The gasoline nationwide common had been in a downward pattern from its September 2023 peak of $3.88 per gallon. A couple of month in the past, the common pump value hovered close to a one yr low of $3.07. The final time the nationwide common fuel value fell under $3 was in Might 2021.
Learn extra: The perfect cash-back bank card for fuel stations for February 2024
What determines the value of fuel?
Greater than half of the value customers pay on the pump comes from crude oil, in keeping with the Vitality Info Administration (EIA).
Oil demand and the manufacturing targets set by the most important oil producers, together with the Group of Petroleum Exporting Nations (OPEC) and its allies (OPEC+), play an necessary function in fuel value fluctuations.
Gasoline costs have climbed increased as crude oil costs surged in latest weeks.
Crude oil futures for West Texas Intermediate (CL=F) closed above $78 per barrel on Feb 15. Brent (BZ=F) , the worldwide benchmark value surpassed $82 per barrel. These strikes partly replicate easing considerations of oversupply after the EIA lowered its US manufacturing forecast for 2024.
Geopolitical dangers have additionally put upward strain on costs. Ongoing assaults in opposition to vessels within the Crimson Sea by the Houthis, an Iran-backed insurgent group, have develop into a wild card for oil costs in 2024. The assaults by Houthi rebels have prompted power and cargo firms to keep away from the Crimson Sea area that connects to the Suez Canal, a vital pathway between Asia and Europe.
Tensions within the Center East have solely escalated over the previous month because the US and UK carried out retaliatory strikes in opposition to Houthi-controlled areas in Yemen, Israel rejected a Hamas ceasefire proposal, and the US killed the commander of an Iran-backed militia following a lethal assault on an American army base.
On the similar time, crude oil costs aren’t the one issue driving fuel costs. Seasonality, refining capability, and distribution additionally affect costs.
In January, gasoline inventories surged to the very best stage in a yr, in keeping with the EIA, however have since come down as demand for gasoline elevated. February snowstorms and chilly climate through the seasonally sluggish winter season, nevertheless, might nonetheless influence driving habits within the coming weeks.
State and federal fuel taxes additionally contribute to the general price of filling up. In California, the state with the very best fuel tax, taxes add as much as $0.51 of the general value per gallon, whereas drivers in Alaska pay simply $0.09 per gallon.
Moreover, fuel costs act as a barometer for the way customers really feel in regards to the financial system, issue into elections, and contribute to the bigger inflation story that prompted the Federal Reserve’s newest rate of interest hike marketing campaign.
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