AAA: Gas prices trending to seven-year high
In the wake of two hurricanes that have slowed oil refinery along the Gulf Coast, the national gas price average rose two cents on the week to $3.19, matching a seven-year-high last seen in early August, according to AAA.
Increasing pump prices are the opposite of what is typical post-Labor Day when gas prices usually fall off due to less demand. But, this year, the impact of Hurricane Ida, followed two weeks later by Hurricane Nicholas, has slowed oil production and refinery recovery along the Gulf Coast.
“Motorists can usually breathe a sigh of relief at this time of year when pump prices start to fall but, not this year,” said Morgan Dean, AAA spokesperson. “And, looking ahead, we aren’t in the clear just yet. We are only at the mid-point for hurricane season, and it has been an active one so far, with 17 named storms already. Drivers can expect price fluctuations into October.”
True to seasonal form, the Energy Information Administration reports gasoline demand has fallen 8 percent to 8.9 million b/d, the lowest since Memorial Day.
Approximately 23 percent of offshore Gulf of Mexico oil production remains offline. However, most storm-affected refineries are reporting some level of restarting. Once fully back online, refinery production will help to increase domestic supply levels, which took another step back by 2 million bbl to 218 million bbl in EIA’s latest report. This is the lowest stock level since the post-Hurricane Harvey period in 2017.
The tightened supply level has contributed to an increase in oil prices, which hit a high of $72 bbl last week, a level not seen since July. If the price of oil remains at this level or goes higher, it will likely result in higher prices at the pump.