This was the longest losing streak in gasoline prices since the beginning of the pandemic. For 98 consecutive days, American drivers saw declining gas prices due to slower global demand for oil.
Global crude oil prices are now higher after last week’s OPEC+ group signaled a reduction in oil production. This has pushed prices up at the pump.
AAA reports that the national average gas price for a gallon rose to $3.92 Monday.
According to Patrick De Haan (chief petroleum analyst at GasBuddy.com), prices will continue to rise as oil prices rise.
He said Monday that oil prices have risen 20% since OPEC+ decided to reduce oil production by 2 million barrels per day. This is what he wrote in a blog posting.
De Haan stated that prices will rise by $0.30 to $4 per gallon in the rest of the country from September’s lows.
Andy Lipow, president and CEO of Lipow Oil Associates LLC, wrote Monday that he expects gasoline prices will rise to $4. Lipow noted that gasoline inventories in the United States have fallen because of lower gasoline prices. This has caused prices to rise.
Although no formal announcement has been made, the Biden administration is considering banning the export of refined products from the U.S. due to low inventories. Analysts believe that such a ban would be detrimental to European allies, at a time when energy prices are rising due to the war in Ukraine.
Drivers on the West Coast and the Midwest will see some relief. There have been some delays in the operation of refineries, but they are expected to resume normal operations soon. De Haan stated that prices at the refineries, which are currently the highest in the country, will likely drop once they do.
Finding refuge at Costco
Costco warehouse buyers may also experience more stability in their prices.
Richard Galanti, Costco’s Chief Financial Officer, explained last month that the company has a gasoline purchasing policy that allows it to keep prices stable when other stations are charging more.
Galanti stated that even though the company is temporarily losing money, this is because Costco has more certainty with its members looking for Costco gas than other stations who must purchase gasoline in advance and then charge a markup to increase their profits.
Galanti stated that prices are rising each day and spot prices are rising each day. “It’s costing us more because we bought it today for the highest price than it was four days ago.”
De Haan, GasBuddy.com’s founder, believes that the current gas price squeeze is going to be a problem for the foreseeable future: “I don’t expect much improvement of prices for most parts of the country.”