Gas prices spike as demand increases: AAA
U.S. to face colder winter months with less oil supply, driving gas prices up, expert says
As the U.S. heads into colder winter months, it's likely that an increase in demand and less supply will continue to drive gas prices up, according to GasBuddy. (iStock)
A combination of increased consumer demand due to warm weather and higher oil prices drove a surge in gas prices, according to the latest report from AAA.
The national average cost for a gallon of gas rose to $3.42, 12 cents more than last week and 33 cents more than a month ago. The increase in gas prices was largely due to more drivers taking to the road to take advantage of the recent bout of milder winter weather, AAA said.
"The recent rising temperatures led to rising pump prices," AAA Spokesperson Andrew Gross said in a statement. "And with the cost of oil hitting $80 a barrel, there is a lot of upward pressure on gas prices at the moment."
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Higher oil costs keep gas prices up
The rise in demand for fuel after China's quick reopening contributed to a 47 cents increase in the price of oil. The cost of a barrel of West Texas Intermediate crude oil rose to $82.11 per barrel, last week according to GasBuddy. The cost of Brent crude also rose by 76 cents to $88.39 per barrel.
As the U.S. heads into colder winter months, it's likely that an increase in demand, combined with less supply, will continue to drive oil and, by default, gas prices up, according to GasBuddy.
"Macroeconomic factors have continued to weigh on oil and refined products, as strong demand in China hasn't been slowed much by a surge in new COVID cases," Patrick De Haan, GasBuddy head of petroleum analysis, said in a statement. "In addition, releases of crude oil from the Strategic Petroleum Reserve have wrapped up.
"Concerns are increasing that without additional oil, supply will tighten in the weeks ahead, especially as the nation starts to move away from softer demand in the height of winter, De Haan continued. "Moving forward, it doesn't look good for motorists, with prices likely to continue accelerating."
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New law would limit the use of Strategic Petroleum Reserve
The Biden administration credited the release of oil supply from the Strategic Petroleum Reserve (SPR) for bringing down the price of gas. However, a recently introduced, Republican-sponsored legislative bill H.R. 21, would limit the federal government's power to release from the SPR.
The legislation would impose restrictions on when the SPR can be used to help boost oil supply while production is ramped up. The Biden administration argues that it could also risk raising gas prices and make it more challenging "to offer Americans relief in the future," Energy Secretary Jennifer Granholm said in a press briefing Monday.
"It would not offer any tangible benefits to the American people," Granholm said. "Instead, it would interfere with our ability to be responsive to release oil during an international emergency…It would potentially delay allowing oil to be released for domestic emergencies following a natural disaster or a pipeline outage at home, leaving, again, prices at risk of rising during- in the wake of a market shock because of emergencies due to extreme weather events."
If Congress passes the legislation, President Joe Biden will veto it, Granholm told reporters.
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