By Bryan Jung
U.S. gas prices climb to their highest level in almost 10 months, with pump prices nearing $4 a gallon nationwide.
The national average for regular gas hit $3.86 a gallon on Aug. 15, according to the American Automobile association (AAA).
Gas prices have not been this high since last October, less than a month before the Labor Day weekend, when millions of Americans end their summers on the road.
The national average is up by $0.04 over the past week.
Pump Prices Surge as Summer Winds Down
As the summer driving season began over the Memorial Day weekend, drivers saw big savings on gas from the year before.
Costs have since risen for the fifth straight week, as the year-over-year savings quickly begins to vanish.
National average pump prices are about $0.10 away from reaching their year-to-year level, which it might actually exceed within weeks.
“The national average price of gasoline continues to hold near the highest level we’ve seen since last October, touching $3.84 per gallon,” wrote Patrick De Haan, head of petroleum analysis at GasBuddy.
“It could climb slightly higher as we get closer to Labor Day, as oil prices remain under pressure from recent OPEC+ production cuts.”
“While July CPI [Consumer Price Index] data looked pretty good with energy prices well below their year-ago level, August data isn’t going to look nearly as friendly.”
There are, according to AAA, currently 11 states with prices averaging $4 or higher, including Arizona, Illinois, and Utah. Colorado and Michigan are close to reaching the $4 level this week.
Spike in Gas Prices Led by Cuts in Crude Oil Production
Gas prices have climbed by $0.29 over the past month and $0.32 cents since July 4 due to higher crude prices caused by supply cuts in Russia and Saudi Arabia and a severe heatwave which took out a few domestic refineries.
On Aug. 3, the Saudi ministry of energy told state-run news agency SPA that the kingdom would extend its voluntary cuts of one million barrels per day.
The Saudis said that that they would extend its crude oil production cuts at least through September.
A Saudi government source told state media that the cuts could be extended further to support the stability and balance of the oil markets.
However, recent forecasts from the International Energy Agency predicted less crude consumption by 2024, mainly caused by a broader economic slowdown in China and the end of the American driving season.
Meanwhile, the largest refinery in the Midwest bumped up its seasonal maintenance several weeks earlier than expected, which has led to an unexpected jump in prices in the Great Lakes region.
“Motorists will likely see a mixed bag at the pump this week, with a few states seeing prices fall slightly, while others will see the opposite,” said Mr. De Haan.