Gas Prices Surge: Refinery Challenges and Crude Oil Prices Behind the Surge

Gas Prices Surge:  Amidst Summer Heat: Refinery Challenges and Crude Oil Prices to Blame

The scorching summer temperatures are not only making people sweat but also driving up the price of gas across the country. According to AAA Motor Club, the average cost of a gallon of regular unleaded gasoline has spiked by 13 cents in just a week, reaching $3.71, the highest in eight months.

One major factor contributing to the surge in gas prices is the increasing cost of oil, which accounts for about half of the price of gasoline. When oil prices rise, it directly impacts pump prices. However, experts point out that the extreme heat this summer is exacerbating the situation. Refineries are facing challenges in functioning efficiently during hot weather, leading to decreased production and higher gas prices.

Patrick DeHaan, responsible for analyzing petroleum at GasBuddy, an online platform that helps users find cheaper gas, explains that if refineries in a specific area are not operating at their full capacity, it is likely to result in a rise in gas prices in that locality.

Tom Kloza, the worldwide head of energy analysis at Oil Price Information Service, highlights that refiners in states like Texas, Louisiana, Tennessee, and others are struggling to run at their highest capacities due to the scorching temperatures, particularly around 100 degrees Fahrenheit.

Recent statistics show that refinery usage across the country is at 93.6%, down 0.9 percentage points from the previous week. The reduction in gasoline and distillate fuel production has further contributed to the increase in gas prices.

Gas Prices Surge


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While gas prices have risen nationwide, they are still comparatively lower than last year. However, the upward trend in the price of oil may continue to impact gas prices. In July, raw crude oil prices increased by $10 per barrel, reaching the highest point in three months. This led to a 24 cents-per-gallon increase in gasoline and other refined products.

Factors like OPEC’s production limits and sanctions on countries like Iran, Venezuela, and Russia are affecting the supply of oil, leading to increased prices. The reliance on exports also reduces the amount of gasoline available within the country, causing prices to rise.

Retailers, however, are not benefiting from these rising gas prices. Tom Kloza reveals that the profit margin for selling gasoline in stores has decreased to 27 cents per gallon, which is one-third of what it was a year ago. Retailers now need more than 30 cents per gallon to make a reasonable profit due to higher costs like wages.

The future trajectory of gas prices depends on various factors. If refineries face shutdowns or concerns about hurricanes impacting the Gulf of Mexico subside, there might be significant decreases in gas prices, even if crude oil prices remain above $80 per barrel.

Overall, the soaring temperatures and the challenges faced by refineries are significant drivers of the recent surge in gas prices. As the summer continues, consumers will need to brace themselves for possible fluctuations in fuel costs.

Our Reader’s Queries

Does crude oil prices affect gas prices?

The cost of gasoline at retail is primarily influenced by the price of crude oil and the quantity of gasoline that is accessible to meet the demand. When there is a high demand for gasoline and other petroleum products in the United States and globally, it can create a strain on the available supplies. This can lead to an increase in the price of gasoline.

Why crude oil prices are rising?

According to Sachdeva, the main factor behind the fluctuation in crude oil prices is the expectation of more supply cuts from major oil-producing countries like Russia and Saudi Arabia. However, he also pointed out that the continuous rise in US oil production might hinder any significant increase in prices.

Why are oil prices shooting up?

The demand for fuel is on the rise as travel rebounds from the COVID-19 pandemic. A strong U.S. economy is driving up the demand and price of oil, while China and Europe’s weak growth is having the opposite effect. This poses a big question for the industry.

What raises crude oil prices?

Supply disruptions and uncertainty about future oil supplies can cause prices to rise. Political events have caused oil supply disruptions in the past, so market participants are constantly evaluating the likelihood of future disruptions and their potential effects.

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