Gasoline prices soar as consumer demand rises in January

Rising consumer demand in the US combined with higher oil prices has led to higher gasoline prices.

The national average price for a gallon of gasoline was $3.46. January 24thaccording to American Automobile Association (AAA) data.

The Automobile Association attributed most of the price increase to good weather and strong consumer demand in an economy still struggling with high inflation.

“The recent rise in temperatures has increased the price of pumps.” AAA spokesperson Andrew Gross said:“And with oil hitting $80 a barrel, there’s a lot of upward pressure on gas prices right now.”

Gasoline rose $0.12 from last week’s average price per gallon, jumping from an average of $3.097 last month.

Even Texas, the only state with average gasoline prices below $3 a gallon until last week, surpassed that this week.

American drivers face higher gas prices in coming weeks

Meanwhile, outside the western United States, AAA noted that many drivers appear to be taking advantage of mild winters in many parts of the country to hit the roads.

“Despite the nasty West Coast weather, mild winters elsewhere in the country may have led to more drivers at the wheel,” AAA said. stated on January 19.

However, a large winter storm expected to hit the South later this week could change that. according to to the Japan Meteorological Agency.

Most of Missouri is expected to face a winter storm through the morning of January 25, with as much as six inches of snow expected across the region.

Meanwhile, most analysts say pump prices could hit $4 a gallon later this year, but are unlikely to hit $5 a gallon as they did in June 2022. increase.

According to federal data, the average price will be $3.97 per gallon in 2022 and is projected to be $3.32 this year.

Oil price surge is starting to be felt at the pump

On the other hand, rising crude oil prices are beginning to have a significant impact on US consumer prices, which are sensitive to the global oil market.

As of February, Western countries are set to begin banning imports of refined products such as diesel and gasoline from Russia, making it likely that another supply-side energy crisis will strike this year.

Additionally, U.S. refineries are preparing for nationwide seasonal maintenance before transitioning to summer gasoline blend production in March, which could limit production over the next few weeks.

Many US refineries are also undergoing further maintenance due to recent storm damage, while others overseas are delaying repairs and shutting down to make record profits.

Another reason for the high gas prices is that inventories of refinery products, especially middle distillates, remain low.

Crack spread oil margin rises

Oil refining margins are starting to surge again as the cost of gasoline, diesel, jet fuel and other petroleum-based products rises.

The WTI 3-2-1 crack spread, a measure of industry refining margins, rose to a three-month high of $42.31 a barrel January 24th. The refinery spread is a leading indicator of future fuel prices.

WTI 3-2-1 crack spreads averaged only about $10.50 per barrel between 1985 and 2021. Javier Blas pointed out in his Bloomberg Opinion column.

In the last 30 years of recorded data, Blass said, crack spreads have been above current levels only once in 72 days, and all but the first two days this week will be in 2022. It’s from

Crude oil demand rises again as China resumes economic activity

Brent crude, the global benchmark for oil prices, is up about 3% year-to-date and is trading near $90 a barrel. Reported UPI.

Much of the oil price surge was due to the Chinese economy reopening from a tight pandemic-related lockdown, now creating strong demand for more oil.

“Despite the high rate of coronavirus infections, the market believes the reopening of the Chinese economy will boost global oil demand and support higher prices,” the AAA said.

“Oil prices could continue to rise this week if market optimism continues,” he said.

The International Energy Agency predicts that global crude oil demand will increase by 1.9 million barrels per day in 2023.